Duplex Owners Can Let The Meter Run

Electric Power MeterThere are two types of duplexes; those where the tenants pay the utilities and those where the landlord does.

And because two comparable properties cash flow differently because of the expenses, each, of course, has a different value.

Many times the reason a duplex owner pays for all of the electric or gas in a building is because of the expense of having separate meters installed, not to mention the considerable cost of installing a second boiler, furnace or water meter.

What can a landlord do if she would like to increase her cash flow but doesn’t have a chunk of change to perform all the utility separations?

Bill the tenants.

In order to do so, the landlord must first provide prospective tenants with a notice of the total utility bills for the year on a month by month basis.

Next, she must have a fair way to split the bills and invoice the tenants. The Minneapolis duplex investors I know who do this usually divide it up proportionately according to the tenant’s share of the total finished square feet of the building. Regardless of the method, however, it must be detailed in the lease.

While it isn’t required, most landlords include a copy of the utility bill. However, the landlord must be willing to provide these bills if the tenant asks.

Billing tenants for utilities also triggers one more requirement. By September 30 of each year, a landlord who bills for utilities on a single-metered building most let tenants know in writing that there may be low-income energy assistance programs available. This written notice needs to include the phone number for that program.

Of course, the landlord doesn’t determine how tenants within the unit split a utility bill among themselves.

It’s important to note that under this rule, a landlord who causes the interruption of utility services may be required to pay tenants triple the amount of damage the interruption caused or $500, whichever is greater, as well as attorneys fees.