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Tenant Utilities Arrears
Michael E. Cobb
Michael E. Cobb
Michael E. Cobb
Mike is a founding partner in the firm and brings a wide range of knowledge of the real estate market in southern Ontario.

Aug 2011-Most landlords (residential or commercial) assume that their tenants are responsible for utilities arrears. This is not necessary true, depending on the policy of the local municipality.
When the Municipal Act was amended several years ago, one of the changes at that time allowed municipalities to add certain utility arrears to the municipal tax bill of the owner (the landlord). The utilities in question are usually the water/waste bills, which are commonly collected for the municipality by the local hydro supplier (eg Norfolk Power collects water/waste charges on behalf of Norfolk County). This can result in a landlord being responsible for the non payment of these utilities that he or she has no control over. Anyone who has experience with rentals knows that when a tenant is behind in rent, chances are good that arrears of utilities are not far behind. This amendment to the Municipal Act reversed long standing case law in Ontario, which basically said that a landlord should not have to guarantee the payment of utilities by his or her tenant.
It is amazing that this has only materialized recently in Ontario. The issue came into play recently in Cambridge and is spreading like wild fire through the Province. In the Cambridge situation, Council passed a policy whereby new waste/water accounts as of January 1, 2011 will only be set up either (a) with the owner/landlord or (b) with the tenant, if he or she pays a deposit and has signed an agreement with the landlord whereby the arrears in excess of the deposit shall be added to the tax bill. In Cambridge's policy, the deposit is $230.00 so, with the water/waste bills that we are seeing in Ontario these days, it does not take long to exceed the deposit. Thus, it is important for landlords to check to see if the municipality in which their property is located, has such a policy. (Norfolk County does not currently have such a policy but that could change of course). If so, they need to make sure that they can check the status of the utilities accounts of their tenants to make sure that they do not have a payment problem. This can be frustrated by privacy legislation so a good relationship with the tenant is important, in order to get their consent. Also, landlords should deal with this issue in their lease agreements as leases expire and are renewed, or new ones established.

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