IS UTILITY SPLITTING A GOOD PRACTICE: A CLASSIC PITFALL

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There are many landlords who rent individual units which share utility meters. A house, subdivided into three rental units, might only have one meter, and the cost of separate metering may be prohibitive. The utility expense must be absorbed and paid by someone. The issue is how best to do it while preserving what is usually an inexpensive and useful housing option for the tenants.

In most jurisdictions this type of utility subdistribution is illegal. Just as only doctors can charge medical fees, lawyers legal fees, and architects architectural fees, so have utilities been granted a monopoly on charging for utility service distribution. The subdistribution of utilities for a consideration is usually a violation of law, and in many jurisdictions, a crime. Some municipalities have enacted ordinances which impose draconian penalties for such arrangements.

The prudent landlord with such a building to let will look at his utility usage history and set the rental rate at a level that will reimburse him for the utilities that he, himself, pays. When the premises are rented, they are rented at a fixed rate, "utilities included." If utility usage increases, a notice of rent increase to cover the extra cost is in order. Most such arrangements involve month to month or other periodic tenancies which permit such rent increases at modest cost in effort.

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