Why are City utilities the responsibility of the property owner, when it is the tenant or occupant using the utilities?
State law recognizes that the primary parties to the utility supply transaction are the City, as supplier, and the property benefited by utility service availability.
Minn.Stat. 444.075, s.3(e), authorizes the City to charge the owner and to certify unpaid charges against the property served as a tax. Minn. Stat. 325E.025, s.2, distinguishes other types of utility services (such as electrical, gas, propane, and telephone) from water utilities, recognizing that water utilities provide a unique benefit to the property and are essential to human habitation. In fact, the law prohibits owners from renting out any premises without a connection to the water system. Gas, electric, propane and phone utilities provide a benefit primarily to the end user - accordingly, the landlord is not responsible for their payment and unpaid charges cannot be assessed against the property.
State law also recognizes that part of the charge for water utilities recovers the cost of the infrastructure and its maintenance. Minn. Stat. 444.075, s.3(a).
Does the City have authority to make me responsible for utilities used by the tenant?
Ultimately, if City utility bills remain unpaid, state law allows the City to assess the charges, penalties and interest against the real property served by the utility. This is consistent with the concept that it is the property that receives the benefit of the utility service, not simply the user. Minn. Stat. 444.075, s. 3(e) states: The governing body may make the charges a charge against the owner, lessee, occupant or all of them and may provide and covenant for certifying unpaid charges to the county auditor with taxes against the property served...
Minn. Stat. 116A.22 provides: Charges established for connections to and the use and availability of service from any water or sewer or combined system, if not paid when due, shall, together with any penalties established for nonpayment, become a lien upon the property connected or for which service was made available. written notice shall be mailed to the owner of any property as to which such charges are then due and unpaid, stating the amount of the charges and any penalty thereon and that unless paid the same will be certified...and assessed as a tax...upon the property for collection with and as a part of other taxes.
What difficulties has the City encountered in billing the property's tenant?
Almost all of the problems experienced by City utility billing staff with tenant billed accounts revolve around the fact that the City is not a party to the lease and has no knowledge about its specific terms.
- The City does not have the ability to identify and track the tenant. The landlord controls the rental relationship, not the City, and can manage the risk inherent in the rental of the property by being selective when choosing a tenant and establishing the lease terms and manner in which rent is collected. Often, the City is not told of a change in tenancy until the new tenant receives the utility bill months later.
- The landlord controls the lease to which the city is not a party. The landlord can fashion the lease to fit the creditworthiness of the tenant. Landlords have the authority to require a security deposit for the last month's utility charges and to make non-payment of utilities breach of the lease and grounds for eviction. Lease agreements differ in their apportionment of the responsibility for municipal utility payment, particularly at the point where a tenant moves out.
- Tenant billing involves city staff in disputes over usage. Tenant occupancies do not coincide with City utility billing periods, hence a great deal of staff time is currently devoted to apportioned billing between outgoing and new tenants. This is an additional service, outside our normal billing cycle for which the City has yet to charge a fee.
- Tenant billing complicates the city's ability to assess. Tenant billing is inconsistent with the City's ultimate collection tool -- assessment against the property. It creates an unnecessary legal issue as to proper notice of the delinquency and opportunity to pay prior to the start of the assessment process.
Why can’t the landlord have the tenant’s water shut off?
MN State Statute 504B.221 Unlawful Termination of Utilities.
(a) Except as otherwise provided in this section, if a landlord, an agent, or other person acting under the landlord's direction or control, interrupts or causes the interruption of electricity, heat, gas, or water services to the tenant, the tenant may recover from the landlord treble damages or $500, whichever is greater, and reasonable attorney's fees. It is a defense to any action brought under this section that the interruption was the result of the deliberate or negligent act or omission of a tenant or anyone acting under the direction or control of the tenant. The tenant may recover only actual damages under this section if:
- the tenant has not given the landlord, an agent, or other person acting under the landlord's direction or control, notice of the interruption; or
- the landlord, an agent, or other person acting under the landlord's direction or control, after receiving notice of the interruption from the tenant and within a reasonable period of time after the interruption, taking into account the nature of the service interrupted and the effect of the interrupted service on the health, welfare, and safety of the tenants, has reinstated or made a good faith effort to reinstate the service or has taken other remedial action; or
- the interruption was for the purpose of repairing or correcting faulty or defective equipment or protecting the health and safety of the occupants of the premises involved and the service was reinstated or a good faith effort was made to reinstate the service or other remedial action was taken by the landlord, an agent, or other person acting under the landlord's direction or control within a reasonable period of time, taking into account the nature of the defect, the nature of the service interrupted, and the effect of the interrupted service on the health, welfare, and safety of the tenants.
(b) The remedies provided in this section are in addition to and shall not limit other rights or remedies available to landlords and tenants. Any provision, whether oral or written, of any lease or other agreement, whereby any provision of this section is waived by a tenant, is contrary to public policy and void. The provisions of this section also apply to occupants and owners of residential real property which is the subject of a mortgage foreclosure or contract for deed cancellation and as to which the period for redemption or reinstatement of the contract has expired.