I recently bought a small apartment building that does not have separate gas and electric meters for each apartment. The previous owner simply divided up the utility bill among the tenants. That doesn’t seem fair to me. What are my options?
First, check your state law and make sure that shared meters are even legal. In some states, such as New York, shared meters are against the law.
Assuming shared utility arrangements are legal in your state, start by disclosing the shared utilities. If there are not separate meters for each rental unit, or if a tenant’s meter measures gas or electricity in areas used outside the tenant’s unit (such as a water heater that serves several apartments or lighting in a common area), you should disclose this in your lease or rental agreement. This type of disclosure is required by law in some states, (see the Nolo article Required Landlord Disclosures for your state rules), including California. Regardless of whether your state law requires landlords to disclose shared utility arrangements to tenants, it’s the fair thing to do.
The best solution is to put in a separate meter for the areas served outside the tenant’s unit. If you don’t do that, you should opt for one of the following:
For more advice on making disclosures to tenants, see the Nolo book Every Landlord’s Legal Guide, by Marcia Stewart, Ralph Warner, and Janet Portman.