Phil Querin Q&A: Sub-metering Third-Party Billing Fees

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Phil Querin

 

Question: Is it permissible for a manager to pass on to tenants third-party billing fees for submetering?

 

Answer: ORS 90.572 provides that if allowed by the rental agreement, a landlord using submeter billing may require tenants to pay a utility or service charge billed by a utility or service provider to the landlord for utility or service provided directly to the tenant’s space as measured by a submeter. But the statute adds that the charge may consist of only the cost provided to the tenant’s space as measured by the submeter, at a rate no greater than the average rate billed to the landlord by the utility or service provider, not including any base or service charge;

 

However, at Subsection 2(g), the statute provides that the utility or service charge assessed to the tenant may consist of a pro rata portion of the cost to read water meters and to bill tenants for water if:

  • The third-party service reads the meters and bills tenants for the landlord; 
  • The third-party service charge does not include any other costs (e.g., costs for repairs, maintenance, inspections or collection efforts); and 
  • The landlord allows the tenants to inspect the third party’s billing records as provided in ORS 90.582 (Posting of water bills).[1]

 

So, it appears from a strict reading of the statute (though not the legislative history), if the third-party service’s charge is solely for the cost: (a) to read water meters, and (b) to bill tenants for water, it is permissible as a pro rata expense – i.e., it is limited to reading the meters and billing the tenants.

 

Accordingly, it would seem prudent for management to review its third-party charges to make sure that they are clearly defined, and that what is passed on to tenants is only a pro rata portion of those two items, i.e., (a) and (b). If the “direct costs” appear to include other services, charges, or fees – or they are not clearly allocated to (a) and (b) alone, they may be subject to attack. For third-party providers, they too may want to revisit how their charges are defined. 

[Note: This discussion is subject to what the legislative history of this statute reflects - keeping in mind that drafted legislation may or may not accurately reflect the legislative history that preceded it. The Answer above is limited to an interpretation of the statutory language only.]

 

 

[1] ORS 90.582 provides: If a landlord bills tenants for water using pro rata billing or submeter billing, the landlord shall post the park’s water bills in an area accessible to tenants, including on an Internet location. The landlord is required, on written tenant request, to make available for inspection all utility billing records relating to a utility or service charge billed to the tenants by the landlord during the preceding year. The landlord is also required to make the records available during normal business hours at an on-site manager’s office (or at a location agreed to by the landlord and tenant). A tenant may not abuse the right of inspection or use it to harass the landlord. NOTE: If the landlord fails to comply with the above posting requirements, the tenant may recover from the landlord the greater of: (a) One month’s rent; or (b) Twice the tenant’s actual damages, including any amount wrongfully charged to the tenant.

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