tenant refuses to pay past due utilities

[mkathyf]

What is the name of your state (only U.S. law)? Ohio
(sorry for this being so long)

We have a tenant in one of our commercial properties who does not believe he is responsible to pay utilities before he physically moved into the property.
This is a year-old issue. I tried collecting last year... up until June, and thought my final email l communication with him was the end of it. I don't do the books, and realized this January that he had never paid. So, brought it to his attention again and, once again, it is still dragging on.

Situation: Lease began January 1, 2013
2. Original Term. The term of this Lease shall be for a period of (60) sixty months commencing on January 1, 2013 until January 31, 2017

FYI: With most of our commercial tenants, we give at least the first month free; to allow them to get moved, do any necessary alterations, and get situated, prior to opening for business. With this tenant, in order to try to help him get a comfortable start, we allowed 2 months...then later agreed to 3 months. (Jan, Feb, March)

However, the responsibility for changing the utilities into their name does not change.

10. Utilities. The TENANT shall pay for all of the utilities that are charged to the demised
premises, which utilities shall include, for the purpose of illustration rather than limitation,
gas, electric, water and sewer charges. TENANT agrees to place all the utilities in his/her
name by the first day of the lease.

So, because the tenant did not intend to physically move his business (gym) into the building until mid-February, he claims he is not responsible for the utilities. He said all he needed to do prior to moving in was to get measurements for equipment, etc.
He believes that since he told us on a few occasions of when he intended to move in, that it also meant he didn't have to transfer utilities...even though we continued to remind him that he had to do so.
Possession: He pressed me to make sure the carpet was installed by Jan. 1. I had the installers working on New Years Eve in order to complete the job.
Tenant received the keys on January 1.

So...do I have the right to collect past due utilities? My attorney first believed we had a solid right. Then, when he thought about the 3 free-rent months, he wasn't so sure a judge wouldn't think that the utilities were to have been waived, as well.
So....what do all you expert attorneys believe.
(sorry this is so long)

(for those of you who will say..."you should have turned the utilities off": it was a VERY cold winter and I didn't want to risk burst pipes. (gas heat in part of the building and electric heat pump in another part of the buildling)
After receiving the January bill, I did tell tenant that I was going to have the utilities turned off. However, when I called the electric company, they were having technical issues and couldn't process my request. Being that it was only two weeks until he was to move in, I decided to wait. BUT, I did continue to remind him that he was responsible for the utilities.

 

[FarmerJ]

is this a city owned utility or not ? if its city owned then by now you must have paid it ? so then you can easily send your tenant a written notice that you paid this amount and if they do not have the money to you with in X you will take legal action. If its not a city owned utility and cannot be added to your taxes then send the utility co a copy of your lease and tell them ` I am not responsible for this bill contact the tenant`

 

[mkathyf]

This is Ohio Edison (Illuminating Company) (electric) and Dominion East Ohio (Gas). They are not city utilities.
We did not charge him for a very high water bill (city utility) because I discovered one of the toilets was running and didn't think it was fair. So, we try to be very fair and understanding.

Yes, we paid the bill. Didn't want "ding" on our credit.

So, you are saying, giving the information I passed along, that he IS responsible for the electric and gas, even though he didn't physically move into the building until mid-Feb.?
And, even though we gave him Jan, Feb and March with no rent? (but the contract period began Jan 1)

Thanks for your input. I appreciate it.

 

[FarmerJ]

You said tenants lease started Jan 1 so that's when the tenant should have had those bills in tenant name , not the move in date , take it from the tenants deposit and send to the tenant a letter inc a copy of the lease and in your letter remind them the lease they have with you started Jan first not the move in date and now x amount must be replenished to restore the deposit to its former amount with in x number of days or eviction based on tenant breach of lease will be started where the tenant will have ample chance to explain to a judge why the start of his lease with you is not Jan 1

 

[FarmerJ]

BTW next time around ask those utilities to send you customer cards they can fill out the day they get the keys from you and require them to be filled out in lease to get the keys so you can mail them into the utility and BTW if you had contacted the util your self to close your acct from when it was vacant and give them the tenants name they could have forced the tenant to create a account or go with out services . You would not have to worry about a so called ding to your credit , if you had closed your account out the utility company cannot force you to pay for tenants use.

 

[Ohiogal]

This is Ohio Edison (Illuminating Company) (electric) and Dominion East Ohio (Gas). They are not city utilities.
We did not charge him for a very high water bill (city utility) because I discovered one of the toilets was running and didn't think it was fair. So, we try to be very fair and understanding.

Yes, we paid the bill. Didn't want "ding" on our credit.

So, you are saying, giving the information I passed along, that he IS responsible for the electric and gas, even though he didn't physically move into the building until mid-Feb.?
And, even though we gave him Jan, Feb and March with no rent? (but the contract period began Jan 1)

Thanks for your input. I appreciate it.

Why was the bill in your name if you had a tenant?

 

[Zigner]

Why was the bill in your name if you had a tenant?

It was in his name from before when he didn't have a tenant.

 

[mkathyf]

To clarify: This was a building we purchased and do rehab. The tenant-to-be operated a gym in town, but wanted more space.
So, of course during the 3 month course of the rehab, utilities were in our business name.
Prior to signing the lease agreement and also during the signing, the tenant-to-be was reminded about transferring utilities to his name. He would only respond to "I won't be moving in until mid February". So, to him, he thought he was telling us that he wouldn't "take possession" until mid-February and therefore wouldn't be responsible for utilities. Of which we NEVER agreed.

Yes, we normally let the tenant-to-be know when we will be turning utilities off. But, in this case we were concerned with the potential of frozen pipes should we cut off all sources of heat. (both gas and electric heat pump heat)

At the point of receiving the January bill, that is when I realized he never made the transfer and at that time I DID tell him I was going to have them turned off. But, when I called the electric company they were having technical difficulties and couldn't process my request. He (tenant) then committed to Feb. 14, which was just around the corner, so I did not proceed with turning them off.

I can honestly say that every tenant we have has been honorable. Just not this one.

 

[FarmerJ]

Im not sure why you pretty much said the same things again, it doesn't matter how you came to own the building NOR does it matter the tenants reason to move in, what does matter is the date the lease began , not the tenants move in date. SO you've allowed this tenant to breach the lease , either your going to take it from the tenants deposit and send certified notice to them that you have taken the money from the deposit and now they must replenish it to be at its previous level and if they wont pay it take them to court for breaching the lease, IF you cant handle it then have a attorney do it.

 

[LdiJ]

To clarify: This was a building we purchased and do rehab. The tenant-to-be operated a gym in town, but wanted more space.
So, of course during the 3 month course of the rehab, utilities were in our business name.
Prior to signing the lease agreement and also during the signing, the tenant-to-be was reminded about transferring utilities to his name. He would only respond to "I won't be moving in until mid February". So, to him, he thought he was telling us that he wouldn't "take possession" until mid-February and therefore wouldn't be responsible for utilities. Of which we NEVER agreed.

Yes, we normally let the tenant-to-be know when we will be turning utilities off. But, in this case we were concerned with the potential of frozen pipes should we cut off all sources of heat. (both gas and electric heat pump heat)

At the point of receiving the January bill, that is when I realized he never made the transfer and at that time I DID tell him I was going to have them turned off. But, when I called the electric company they were having technical difficulties and couldn't process my request. He (tenant) then committed to Feb. 14, which was just around the corner, so I did not proceed with turning them off.

I can honestly say that every tenant we have has been honorable. Just not this one.

You have received very accurate legal advice. Now I am going to give you some business advice. This may or may not be a "hill to die on". You have already stated that your attorney is uncertain. Is this an otherwise good tenant who pays the rent on time? Is this a tenant that you hope would renew once the original lease term expires? Is your building in an area where space is at a premium and you will have many people wanting the space if your tenant vacates or you evict him? Or is your building in an area where there are lots of empty spaces available? How much money are we talking about?

There are legal issues and there are business issues when it comes to commercial space. You have to balance both carefully. Some commercial landlords focus on the legal issues so seriously that they miss the business issues. Please keep in mind that commercial space is very different when you have to get a new tenant...because build out is very different...and everything is negotiable.

Example...

So the tenant continues to refuse to pay the January utilities and you eventually have to evict the tenant. The unit ends up empty for six months with no rent being collected. Who won?