Phil Querin Q&A - Multiple Question on Water Sub Metering

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July 12, 2017
Phil Querin
MHCO Legal Counsel
Querin Law

Questions. My question is in regards to sewer and water pass throughs: 

1. Is it still true, that you can pass through utilities?

2.  If so, what is a reasonable time for notice? 

3.  The newer MHCO space rental agreements do have a provision for pass through, however what if a tenant has been in the park for years & there is no provision for pass through on a rental agreement that they signed?  

4.  I do know of a MHP that does pass through and they send a bifurcated bill- one for utilities and one for space rent.  However, most tenants pay with one check or money order.  I have a MHP in Southern Oregon and the sewer is a fixed amount, so it would be easy to divide that amount up between the tenants, obviously with a proviso that if the sewer bill increases or decreases we would make an adjustment to the bill.

 

A MHP that does pass through water and sewer told me that their bill decreased by about 30% because the tenants knew they were now paying for the water and tried to conserve.  They knew their bill would be reduced if they used less water.  In my Southern Oregon MHP, the sewer is a fixed amount so that incentive would not be there unless the sewer district decreased their bill to the park and I had not intended to pass through water at this time.  NOTE:  If I metered the park it would be very expensive & I would have to take each tenant to small claims if they didn't pay.  Even though it's the same with pass through, the tenants don't get bill separately each month, so it looks different.

 

 

Answer.  Your questions are all good ones, but generally are dealt with in the utility pass-through laws.[1]  Here is a summary:

 

  1. Right to Pass Through Utilities.  If a written rental agreement so provides, the landlord may require tenants to pay a utility or service charge that has been billed by a utility or service provider to the utility or service provided directly to the tenant’s space as measured by a submeter

 

  1.  Permitted Charges. The utility or service charge to be assessed to the tenants may consist of:
    1. The cost of the utility or service provided to the tenant’s space and under the tenant’s control, as measured by the submeter;
    2. The cost of any sewer service for stormwater or wastewater as a percentage of the tenant’s water charge as measured by a submeter, if the utility or service provider charges the landlord for sewer service as a percentage of water provided; and
    3. A pro rata portion of any base or service charge billed by the utility or service provider, including but not limited to any tax passed through by the provider.

 

  1. Prohibited Charges.  The utility or service charge may not include:
    1.  Any additional charges (including any costs of the landlord), for the installation, maintenance or operation of the utility or service system or any profit for the landlord; or
    2.  Any costs to provide a utility or service to common areas of the facility.[2]

 

  1. Unilateral Amendment.  Landlords may unilaterally amend a rental agreement to convert a tenant’s existing utility or service billing method to a submeter billing method.  The language in the amendment must fairly describe the submetering provisions.

 

  1. 180-day Notice.  Landlords must give the tenants not less than 180 days’ written notice before converting to a submeter billing method.  (PCQ Comment - I believe landlords can send out the unilateral amendment anytime – It does not have to correspond to when they send the 180-day notice out.  The “unilateral amendment” language means that the landlord does not need tenant “consent.”) 

 

  1. Access to Install or Maintain Meters.  Landlords must give notice before entering a tenant’s space to install or maintain a utility or service line or a submeter that measures the amount of a provided utility or service.
    1. PCQ Comment - The statute does not treat submeter installation as something that must wait until the 180-day notice is mailed.  Installation may commence at any time following unilateral amendment of the rental agreement. 
    2. The landlord must give tenants at least 24 hours’ actual notice of intent to enter and the landlord or landlord’s agent may enter only at reasonable times.
      1. PCQ Comment – Although the statute only says “actual notice” (e.g. phone call or phone message left on recorder) I would make sure it is in writing.  If it’s mailed the landlord would have to add three additional days before gaining entry.  If delivered, and the clock time of delivery was put on the notice, the landlord wouldn’t have to add any additional time beyond the 24 hours.   The 24-hours applies to the minimum amount of advance notice – not to the actual date of intended entry – so long as the entry is not within the 24-hour period. 
    3. Landlords may not enter if the tenant, after receiving the notice, denies consent to enter. The tenant must assert this denial of consent by giving actual notice of the denial to the landlord prior to, or at the time of, the attempted entry.
      1. If the tenant refuses to allow lawful access, landlords may obtain injunctive relief to compel access or may terminate the rental agreement with 30-day notice under ORS 90.630 (1). In addition, landlords may recover actual damages.  I’ve never seen this happen, although I have seen situations where some tenants refuse to allow the installation, but they usually come around, since the benefits are well known.
      2. PCQ Comment – Once the amendment is in effect the landlord can start the submeter installation anytime thereafter. 

 

  1. Reduction of Base Rent.  If the cost of the tenant’s utility or service was included in the rent before the conversion to submeters, landlords must reduce the tenant’s rent upon their first billing of the tenant using the submeter method.
    1. Although the statute does not set forth a “formula” for calculation, the rent reduction may not be less than an amount “reasonably comparable to the amount of the rent previously allocated to the utility or service cost averaged over at least the preceding six months.”
    2. Before landlords first bill the tenant using the submeter method, they must provide the tenants with written documentation from the utility or service provider showing their cost for the utility or service provided to the facility during at least the six preceding months. 
  2. Prohibition on Subsequent Rent Raises.  During the six months following a conversion to submeters, landlords may not raise the rent to recover the costs of installing, maintaining or operating the utility or service system or of new lines or submeters.
    1. Except as part of the rent, landlords may not charge the tenant for the cost of installation or for any capital expenses related to the conversion to submeters or for the cost of maintenance or operation of the utility or service system. (The term “operation” includes, but is not limited to, reading the submeter.) 
    2. PCQ Comment: What this means to me is that the landlord can raise rent in the ordinary course after the six month period and apply it toward recoupment of the capital costs.  However, I would not “advertise” it and the rent raise statute (ORS 90.600) does not require landlords to do so. 

 

  1. Entry to Read Submeter. Landlords or their authorized agent may enter a tenant’s space without tenant consent for the purpose of reading a submeter. The following restrictions apply:
    1. Landlords may not remain on the space for a purpose other than reading the submeter.
    2.  Landlords may not enter the space more than once per month.
    3. Landlords may enter the space only at reasonable times between 8 a.m. and 6 p.m.
 


[2] Note: Common area utility charges may be passed through, but that right must be included in the rental agreement and the amount passed through per tenant must be calculated on a proportionate basis, e.g. the number of spaces in the park being the denominator.

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