This article outlines a landlord’s options in situations where the tenant has breached an obligation to pay for utilities. Can the security deposit be used to cover that obligation? Can the landlord pursue an eviction against the tenant based on unpaid utility bills? What other rights and obligations may a landlord have when the tenant fails to honor his agreement to pay for utilities. We answer those questions below.
Is the Tenant Responsible for Payment of Utilities?
The parties’ lease agreement typically includes a clause stating who pays for utilities, so the agreement provides the starting point for the analysis. The bills your tenants are responsible for paying should be detailed in the tenancy agreement. Generally, these will be gas, electricity, water, telephone, and internet.
The lease agreement should specify that the tenant is responsible for paying utilities, how those payments must be made, and what will happen if a tenant doesn’t pay their utility bills before moving out. Make sure that your tenancy agreement clearly sets out that utility payments are to be made directly by the tenant, and ensure the agreement is signed by the tenants. By clearly outlining this in your lease agreement, both parties will be on the same page from day one.
If the lease agreement fails to address responsibility for utilities, the general rule is that responsibility rests with whoever is on the bill. In certain situations, a landlord may be exposed to liability for a water or sewage bill because that obligation is tied to ownership of the property. The water and sewage bills are handled by local municipalities, who may hold the landlord accountable if the tenant fails to pay—no matter whose name is on the bill. For other utility bills, in the absence of a lease agreement provision, the party named on the bill is the responsible party.
Can the Security Deposit be used to Pay Utilities?
In California, it is not legal for landlords to withhold any of the security deposit to cover utility bills. Landlords can only withhold funds from the security deposit for unpaid rent, fixing property damage beyond normal wear and tear, or cleaning the unit after a tenant leaves.
Can the Tenant be Evicted for Failing to Pay Utilities?
The tenant is subject to eviction for failing to pay utilities when that obligation is clearly spelled out in the lease agreement. Thus, if they sign a lease requiring them to put the utilities in their name, their failure to pay utilities provides grounds for pursuing an eviction case against them for breach of the lease agreement.
The process for enforcing the non-payment of utilities is different than enforcing the non-payment of rent. Both require a 3 Day Notice during which the breach can be cured if the obligation is paid in full during that period. However, for breach of an agreement to pay utilities, the landlord is required to serve a second, unconditional three-day notice before commencing eviction proceedings against the tenant.
Small Claims Court
Where the property owner ends up paying a bill the tenant should have paid, the landlord has the right to file a small claims case to recoup the loss. This is especially true if the lease states that if the landlord must pay any amounts or do anything which the tenant should have paid or done, then the landlord may recover those costs, etc. from the tenant.
The maximum amount you can sue for in Small Claims Court is $10,000, except that a plaintiff may not file a claim over $2,500 more than twice a year. Obviously, this route does not help should a tenant not have the money to pay you.
Please contact Lynx Legal with any questions regarding the above, and for all your eviction needs. We can be reached at 888-441-2355 or info@lynxlegal.com. Our experienced professionals are standing by to take your order or answer any questions you may have.