If you own rental properties in markets like north-central Pennsylvania, you may already know that water and sewer authorities hold property owners liable for unpaid utility bills. This risk makes many landlords hesitant to have tenants pay these bills directly. After all, if a tenant runs up a high balance and skips out, the landlord is left holding the bag.
Many landlords try to avoid this risk by including water and sewer in the rent, but this approach has its own downsides. There’s a better way to manage these utilities while ensuring that tenants remain responsible for their usage.
Why Tenants Should Pay Their Own Water and Sewer Bills
When a rental unit is individually metered and a clear, accurate bill can be provided for a tenant’s usage, it makes sense for the tenant to be responsible for that expense. Here’s why:
- Fairness – Water and sewer usage is entirely under the tenant’s control. Landlords should not have to cover unpredictable utility costs, especially when tenants may not report leaks or take steps to conserve water.
- Encouraging Responsibility – When tenants are responsible for their own bills, they have an incentive to report leaks and avoid excessive use.
- Protecting Profitability – Including utilities in the rent often means landlords either charge too little and absorb losses or overestimate costs and potentially price out good tenants.
The challenge, of course, is that many water and sewer authorities will not hold the tenant accountable for unpaid bills. Instead, they send the bill to the property owner, making it risky to shift responsibility to tenants.
A Simple Solution to Avoid Utility Risk
The key to making this work is a structured payment and reimbursement system. Instead of requiring the tenant to pay the water and sewer authority directly, landlords can follow this process:
- The water bill arrives in the landlord’s name.
- The landlord (or property manager) pays the bill on time to keep the account in good standing.
- The tenant receives an invoice for the exact amount of the bill. There are no additional fees or markups.
- The tenant reimburses the landlord within a set period, usually two weeks.
By following this approach, the risk of unpaid utilities is eliminated while still ensuring that tenants take responsibility for their usage.
Additional Benefits of This Approach
Beyond reducing financial risk, this system provides better oversight of water usage and potential property issues.
- Catching Leaks Early – Reviewing water bills allows landlords to spot unusual spikes in usage. Many times, landlords notice leaks before tenants even report them, leading to faster repairs and cost savings.
- Identifying Potential Lease Violations – If a property’s water usage is abnormally high and there’s no sign of a leak, it could indicate unauthorized occupants or undisclosed business activity in the rental unit.
- Keeping Properties in Compliance – Some areas have regulations on water conservation and proper maintenance. Monitoring usage helps ensure compliance with local laws.