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Commercial Tenant Water Bills

Posted by Capital Retail on October 4, 2018
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In most commercial leases, water and sewage charges are in the utility section of the lease and usually the responsibility of the tenant. So if the lease says, Tenant is responsible for all utilities associated with Property, then the water bill is their responsibility. Yet, if the water bill is not paid by the tenant, public municipality utility companies, such as DC Water and Washington Suburban Sanitary Commission(WSSC), have the power and right to place a lien on the property. As property managers, one of our responsibilities is to mitigate financial headaches for the landlord so we recommend that we  pay the water bill and then collect from the tenant.

There are two main ways to recover water bill charges from the tenant. Bill the tenant actuals or charge the tenant an estimated water amount for each month and reconcile at the end of the year. We send out monthly rental invoices so adding water actuals on the very next billing statement is our preferred method. We review  the water bills closely for unusual high water consumption patterns which can often mean a leak in the tenant’s premises. We alert the tenant who often appreciates the heads up. They can fix the issue and have lower water bills going forward as a result. Also avoiding end of the year water reconciliation is a bonus for the landlord, tenant, and property manager. The tenant will need to be aware the water bill will fluctuate the total monthly due.

Fluctuating rental invoices can cause headaches for larger tenants who may not have flexible internal procedures or systems set up. However, we avoid this issue by clearly stating in the lease how the billing will work and we follow up with the individual tenant accounts payable department to explain how it will work. In summary, the water is paid without any issues and everyone stays happy including the water company!

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