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I own a couple of rental properties and I need advice on one...
I entered into a lease with a tenant in June of 2008 that became effective on July 1, 2008. I negotiated the lease to include the tenant paying for water services; just as I had in past rentals. When I first started renting the property I cleared with the city and county that water liens could not be placed against me due to tenant default on their own accounts.
When I entered into the lease I scheduled to have the water shut off upon lease assumption, and the utility company (the city) agreed to do so. This was over the phone. The city that the property is located in then adopted an ordinance that water utilities must be in the name of the property owner, not the tenant. I was never notified of this ordinance change. It became effective on July 1, 2008 - the same date that my lease commenced; so the water bill remained in my name without my knowledge.
So now my credit report shows a twelve month delinquency for water services for this rental property. I have never been aware of the law change and have never received a bill by the utility company. The utility company has my mailing address, and it is clearly shown on tax records. I now owe $2,500 in back bills. Who the heck uses $220 per month in water???
This money certainly cannot be recovered from the former tenant... I would have to wait in line. My credit report has always been impeccable, and this severely impairs my future endeavors. Any ideas about what my recourse might be? I fear that I am SOL...
I own a couple of rental properties and I need advice on one...
I entered into a lease with a tenant in June of 2008 that became effective on July 1, 2008. I negotiated the lease to include the tenant paying for water services; just as I had in past rentals. When I first started renting the property I cleared with the city and county that water liens could not be placed against me due to tenant default on their own accounts.
When I entered into the lease I scheduled to have the water shut off upon lease assumption, and the utility company (the city) agreed to do so. This was over the phone. The city that the property is located in then adopted an ordinance that water utilities must be in the name of the property owner, not the tenant. I was never notified of this ordinance change. It became effective on July 1, 2008 - the same date that my lease commenced; so the water bill remained in my name without my knowledge.
So now my credit report shows a twelve month delinquency for water services for this rental property. I have never been aware of the law change and have never received a bill by the utility company. The utility company has my mailing address, and it is clearly shown on tax records. I now owe $2,500 in back bills. Who the heck uses $220 per month in water???
This money certainly cannot be recovered from the former tenant... I would have to wait in line. My credit report has always been impeccable, and this severely impairs my future endeavors. Any ideas about what my recourse might be? I fear that I am SOL...
Lesson learned - you are obvioulsy not a property manager, but you are getting familiar with all
the good stuff one needs to know about renting properties. Good luck on the more things that will happen.
Lesson learned - you are obvioulsy not a property manager, but you are getting familiar with all
the good stuff one needs to know about renting properties. Good luck on the more things that will happen.
I have a property manager, one of the most prominent in the city. He manages/lists numerous properties owned by major banks. He has never heard of this ordinance, and is an active citizen of the city. I am certainly not claiming that he shafted his responsibilities, as the ordinance was never properly made public. Since he manages bank owned properties, the water would only come into the name of the owner until the deed recording, as expected. The issue would not have surfaced on his radar unless a private citizen/client had problems.
I am extremely familiar with the issues of renting out property; I still profit from it despite economic downturns. I will make a very hefty profit on the sale of the property in question, despite the lien. I just don't think that I am responsible for delinquent water bills that should never have been held against me. Once the account was two months delinquent, why in the world would they not shut it off??
In the city where we own, we were warned (by friends in the H2O dept) years ago to keep the H2O in our names and merely bill the tenants ourselves via invoice. Otherwise, the city has been known to auction off delinquent props without notifying owners. Which is very business friendly, in my sarcastic opinion. Frankly, the whole system stinks like... bad water.
Tra la! Real estate investing! The key to riches! Tra la!
Anyway, sell the prop, take the hit (or, the "very big profit"), chastize your big-time prop manager, and never ever allow a water account to remain in the name of a tenant. That would be my advice. (Which it sounds like you already know.)
In the city where we own, we were warned (by friends in the H2O dept) years ago to keep the H2O in our names and merely bill the tenants ourselves via invoice. Otherwise, the city has been known to auction off delinquent props without notifying owners. Which is very business friendly, in my sarcastic opinion. Frankly, the whole system stinks like... bad water.
Tra la! Real estate investing! The key to riches! Tra la!
Anyway, sell the prop, take the hit (or, the "very big profit"), chastize your big-time prop manager, and never ever allow a water account to remain in the name of a tenant. That would be my advice. (Which it sounds like you already know.)
Good luck!
MC
Thank you; I know it now. I am selling the property, and despite the lien, I will still profit greatly. I cannot garner too much sympathy in my situation; as I should have followed up. I truly hold no responsibility to my property manager; he has worked his butt off without proper compensation .
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