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Should utilities be in tenant's name?

Utilities need to be set up in a way that a tenant's failure to pay does not damage the property.

Most of us would like to rent out our rental properties with the tenant paying all utilities. While this is certainly preferred there is one caveat to watch out for.

If your rentals are in an area where having the power go off could damage your property you may want to keep the utilities in your name. For instance, if it freezes in the winter and your tenant neglects to pay a power bill you could end up with frozen water pipes and not enough deposit from the tenant to pay for the damage.

Most utility companies have a provision where you can request a "no turn off" of sorts whereby if the tenant fails to pay the bill you get notified as a master account holder to keep the power from being turned off. Another example of the same thing happening thru no real fault of the tenant would be where the tenant moves out at the end of the lease and somehow the utilities don't go back into your name.

If having a provision like this is not possible with your local utility you may want to consider keeping the utilities in your name and billing the tenants yourself. That way you're assured the power stays on and you don't suffer unnecessary damage to water pipes, lawns, etc.

Keep in mind in that last paragraph that the utility income you receive needs to be reported as income with an offsetting expense for the actual utility bill. You can't just treat it as a "wash" and not report it even though that's the net effect. You can read more at common rental income mistakes.

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