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Changing Utility Charges from Landlord to Tenant

Peter Mark Heintzelman, Esq.

Visit My Webpage: Heintzelaw.com

Its great for landlords to convert heat and electric into separately metered units per apartment, with the goal of transferring those expenses onto tenants, together with a monthly rent. Nothing like letting people pay for their own utilities to encourage conservation, and to make less out of pocket expenses for landlords. It can also help tenants by stabilizing rent increases.

A landlord, however, can not just tell an unwilling tenant that the landlord will no longer be responsible for utilities. The legal route is this:

Try to get the tenants to voluntarily sign an amendment to the written tenancy at will agreement or lease, whereby the tenant acknowledges in writing, their assumption of separately metered utilities, with an effective commencement date.

If that doesn't work, then what you do, depends on the nature of your tenancy:

A. For a tenant at will - technically a landlord should serve a "30 day notice with offer to create new tenancy " form {be careful, technically, it's not 30 day notice, but "next full month's notice}. By that form, the landlord seeks to renegotiate the new tenancy to include the shifting of utilities onto the tenant (just be sure its clearly specified in the "offer to create a new tenancy" and clearly spelled out in the upcoming written tenancy at will agreement.

So, for example, if you served in October, a month to month tenant, who's rent is payable on the first of each month, a so-called "30 day notice to quit with an offer to create a new tenancy," it would terminate the current tenancy effective December 1, and if the tenant hasn't signed the new tenancy agreement, which includes a shifting of those utilities upon the tenant, the landlord may elect to proceed by summary process to seek a judgment for possession.

Until the tenant signs the new written tenancy at will agreement, however, the landlord MUST continue to pay for those utilities he/she originally paid for, throughout the remainder of the tenants' occupancy, which by the way, because the eviction is a 30 day notice route, kicks in the court's discretion to grant the tenants a stay of execution for 6 months or a year for elderly/disabled, on the same terms last existing between the parties (which can include the landlord continuing to pay utilities even if separately metered!).

B) For a Leasehold Tenant , the landlord has to await the lease's termination date before being able to renegotiate the following year(s) lease terms, including a utility expense transfer. Be very careful to read such leases, as some have automatic renewal terms, upon the same terms and conditions, unless one or the other party send written notice, often due months before the end of a lease term. Some leases contain illegal provisions regarding lease termination or the like and have to be matched up with the legal limitations on some types of notices to quit.

If at the end of a lease term, the landlord presents a lessee with a new lease for year two, transferring separately metered heat and/or electric to the lessee and the lessee doesn't sign it by end of lease year one, the lessee converts to a tenant at sufferance, subject to summary process proceedings, and until the occupants are vacated from the premises, the landlord continues paying for utilities, whether separately metered or not. Landlords must be careful to accept monthly rent payments after a lease term expires for fear of the court establishing an oral tenancy at will. "For use and occupancy receipts" work only so long, and unless a summary process summons and complaint goes out promptly, the landlord may be deemed to have waived his rights, and be subjected to an oral tenancy at will -back to square one!

Agreements for Judgment in Housing Court, can seek by agreement to modify or transfer these obligations during the remainder of occupancy, obviously only if both parties agree.

Based upon the foregoing, landlords may want to plan the physical improvement/upgrading of utility systems, to maximize a quick return after connection to coincide with tenant assumption of separately metered utilities.

For those 3 decker or less property owners (dwellings containing three or fewer units), maximize your gains by having the electrician connect the common hallway lights, foyers adjacent thereto , to each floor's apartment, to reduce the landlord's common area bills (i.e., some things cannot be transferred to such tenant, such as basement lights, exterior common porches, garage and parking area lighting, etc.) Just be careful not connect such items to a tenants meter without first obtaining the tenants' written consent thereto, by way of a written amendment to the existing written tenancy agreement.