The Utility of Reviewing Your Tenant Utility Billing Practices

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Bradley S. Kraus
Attorney, Warren Allen, LLP

Every year, new issues seem to take the landlord/tenant world by storm. Some have a larger effect than others, but these new issues often result in lawsuits or an increased frequency of counterclaims in eviction actions.

Wherever these issues are litigated, they complicate the business of being a landlord.

The newest issue involves challenges to the practice of billing tenants for utilities. Given the dollar figures involved in some of these lawsuits, there’s new utility in reviewing how you bill utilities.

As an initial matter, ORS 90.315, the utility-billing statute of the Oregon Residential Landlord and Tenant Act (ORLTA), requires that the rental agreement describe the utilities a landlord intends to bill to the tenant.

While that may seem like an obvious requirement, I occasionally encounter issues with clients believing their rental agreements allow them to charge for a utility when the rental agreement is devoid of any language allowing them to do so. If these landlords are billing those undisclosed or unmentioned utilities, it can have disastrous consequences.

Assuming a landlord has a written rental agreement allowing him or her to charge for utilities, ORS 90.315(4) is where I see landlords trip up the most. This section contains a variety of disclosure requirements, which many landlords—or their third-party billing agents—overlook.

Litigation involving this statute centers around three separate requirements:

  • A landlord must bill the tenant in writing for the utility within 30 days after receipt of the provider’s bill.

This requirement starts the clock on the landlord from the time they receive the provider’s bill. Many landlords go through third-party billing companies that bill the tenants for the landlord, but the same timeline requirements would apply to those third-party billing companies. If the third-party billing company is not sending the tenant a bill within 30 days of receipt of the utility provider’s bill, the landlord is likely liable for that failure.

  • The landlord must make certain disclosures in the rental agreement or in a bill to the tenant.

ORS 90.315 requires the landlord to disclose the following information, either in the written rental agreement or in a bill to the tenant:

(i)            The manner in which the provider assesses a utility or service charge; and

(ii)    The manner in which the charge is allocated among the tenants if the provider’s bill to the landlord covers multiple Tenants.

Claims arising under the statute usually target this provision due, in my opinion, to the vagueness of the same and also because no guidance on these disclosures exists. Often, rental agreements or the bill provided by the landlord/third-party billing agent may not be specific enough as to how the provider (as opposed to the landlord) assesses the charges. No one really knows for sure how detailed this explanation must be. As more litigation asserting utility claims floods the courthouse, erring on the side of caution and providing as much detail as possible on the provider’s assessment of charges is recommended.

  • The landlord must include the provider’s bill with the utility bill or inform the tenant they can inspect the provider’s bill.

The disclosure requirements require a landlord to do one of the following, with regard to the utility provider’s bill:

  • Include in the bill to the tenant a copy of the provider’s bill; or
  • If the provider’s bill is not included, state that the tenant may inspect the provider’s bill at a reasonable time and place and that the tenant may obtain a copy of the provider’s bill by making a request to the landlord during the inspection and upon payment to the landlord for the reasonable cost of making copies.

Reviewing the above, compliance with this statutory requirement requires only one of these tasks. Landlords can either send the provider’s bill directly with any tenant-specific bill (which may require copying and other administrative tasks), or simply state in the tenant-specific bill that the “tenant may inspect the provider’s bill at a reasonable time and place and that the tenant may obtain a copy of the provider’s bill by making a request to the landlord during the inspection and upon payment to the landlord for the reasonable cost of making copies.”

The damages provision of the statute is also the subject of dispute among landlord/tenant attorneys.

Tenants’ attorneys are taking the position that any violation of the above disclosure requirements entitles a tenant to one month of rent in every month for every utility for which a landlord fails to comply with the above requirements. While attorneys disagree on the scope and amounts of damages involved, such claims are stressful, time-consuming, and costly.

The above only scratches the surface of ORS 90.315 and the practice of tenant-utility billing in general. Accordingly, find and use competent legal counsel, and ensure that your utility-billing practices comply with the statute.

About the author:

Brad Kraus is an attorney at Warren Allen LLP. You can reach him at kraus@warrenallen.com or 503-255-8795

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About Author

Brad Kraus

Brad Kraus is an attorney at Warren Allen LLP. His primary practice area is Landlord/Tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family law matters. A native of New Ulm, Minnesota, he continues to root for Minnesota sports teams in his free time. He is an avid sports fan, enjoys exercise, spending time friends and his fiancée, Vicky. You can reach Mr. Kraus via email at kraus@warrenallen.com, or by phone at 503-255-8795.

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