The importance of Tenant keeping Utilities on….

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The importance of Tenant keeping Utilities on….

If you’ve noticed a common thread to my posts, it is the critical nature of setting proper expectations for ALL PARTIES in a lease transaction.  In other words, it’s critical for the Tenant to know what is expected of them just as it is for the Landlord to know their role.

Today’s article is about the need to properly and repeatedly communicate with Tenants about utilities.  And keeping them turned on!

Now, most leases will have clauses in them about who pays for the utilities–Tenant or Landlord–and that is good to have this clarity.  Where I see the expectation “break down” between Tenant and Landlord or Tenant and Property Manager is this:  What about the time period when a Tenant voluntarily moves out of the home before the end of the lease and they turn off the utilities thinking they’ll save money?

kitchen wood flooring damage

Case in Point:  The picture of this once-beautiful hardwood kitchen floor, likely ruined by the short-sighted thinking of a Tenant.

The Tenant moved out early, disconnecting his electricity and gas service.  After all, he had completely moved out and didn’t see the need to pay for an empty house.  Common sense, right?  Except the Tenant forgot about what happens when electricity isn’t flowing to a property, specifically the refrigerator.  The ice in the freezer side of the appliance melts and the water finds the path of least resistance for an exit–meaning out the bottom of the fridge.

And now the landlord and tenant have a problem.  A pricey problem.  A problem which could have been avoided.

Take Away’s:  

  1. Communicate in the lease agreement that the Tenant is responsible for keeping all the utilities in their names and paid until the lease expires, even if they move out a day, a week, a month early.
  2. Communicate with the tenant near the end of the lease again about the need to keep utilities in their names and not disconnected.  You literally cannot over-communicate how important this is for the Tenant’s interest as well as that of the Landlord’s.
  3. If you are managing property for Landlords, have processes in place to remind the Landlord to have service transferred back into their name at the end of the lease, unless you do this for the Landlord yourself.
  4. Have a Landlord Reversion Agreement in place with all the utility companies whereby if utilities are disconnected voluntarily by a Tenant or not paid by a Tenant, the utility account automatically reverts back into the Landlord’s name.  This way, service is not interrupted.

 

Anticipate your Tenant’s actions and you can look forward to Financial Freedom much faster.

 

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