Dear Monty: Utility bill increase squeezes tenants
Reader question: I am a long-time resident at an apartment complex that used to have utilities included with the rent. In 2010, they switched to charging shared utilities. The average monthly increase was about $20-$30. Since April 2013, the complex is now using a third-party billing company. The utilities added to the rent have increased to $150-$200 a month. My bill last Nov was $50 ... this November it was $140. We have many 20-year residents here on fixed incomes, and the increases have hurt them badly. I contacted the billing company, and they just state that they are billing according to the information management is sending. I have tried contacting real estate attorneys with dismay, as they are landlord attorneys. We are all desperate, and we truly loved living here. It is our community. Also, we have a manager who is young and can be vindictive. Is this legal, Monty? Any Advice? Mike L.
Monty’s Answer: Hello, Mike, and thanks for your question. I am sorry to hear of this difficult situation. There are some facts missing that make it difficult to get the entire picture. Here are questions that need to be answered for yourself and a reaction to your question.
The big-picture questions
How much is your total rent today including utilities from April 2013 until now? How much was your total rent, including utilities, between April 2012 and April 2013? What is the age of the complex? Has it been updated since the original construction? How large is your unit based on livable square footage (do not count outside patios or an attached garage)? Make a list of extras included in the rent (items like stove and oven, washer and dryer, refrigerator and more). What other amenities are included (carport, garage, swimming pool and more)? How well are the units and the buildings maintained (lawn and shrubbery, roofs, paint, blacktop, outside lighting and more)? Is a lease in existence? Does the lease address rent increases?
List all these items on a sheet of paper and answer every question.
Tour the competing apartments
Make an appointment to view apartments “for rent” within a few miles that contain similar extras and amenities. Look for property in similar condition and age as the current complex. With only three events that can unfold we learn that the units:
1. Are under the current market.
2. Are overpriced.
3. Are priced like other similar units.
Everyone will feel better about staying in the complex because this exercise provided information to help understand the marketplace.
Landlords do not like to lose good tenants, but landlords also do not like to rent apartments for less than the market rate. If tenants do not have a lease or the lease does not prohibit rental rate increases or limits the increases, the landlord has the right to raise the rent. Conversely, tenants may have the right to move out.
Examine what has changed
The concept of “shared utilities” that management rolled out in 2010 should be reviewed. All parties need to understand exactly how the concept works. This is important for comparing your current apartment rent with other competing rents. How is your electric and gas connection metered? If it were not metered, what formulas were being applied to gauge usage? Are tenants paying to heat or cool common areas? The same questions are applicable on the water bill. Are all the tenants paying to water the lawn? Most states have regulations that limit or prohibit landlords from up-charging utility bills.
Get a legal opinion
A new fact may be discovered in completing the process above that would dissuade the tenants from considering an attorney, or conversely, to seek one out. By investing the time and effort to learn the details of how the increases originated, one can intelligently consider their options. A vindictive manager raises the possibility some legal muscle may help to discover the necessary answers.
Not all attorneys represent landlords. Tenant attorneys are easy to find with an online search for “tenant attorney.” Someone in your complex may qualify for legal aid. Ask your neighbors to chip in for the consultation. By acquiring more knowledge, all tenants are protecting themselves and can better decide which course of action is the best.
Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. You can ask him questions at DearMonty.com.