Unusual Problem between Tenant and Landlord - Have You Ever Heard of This before??

Has anybody encountered this type is issue before? I am a landlord (in SA) and have my property (average suburban 3 br house in the burbs) managed through a property manager. For historical reasons only, I receive the electricity bill in my name, I pay it for the tenant and then pass the bill to my agent so that they can bill the tenant for reimbursement (the tenant gets a copy of the original bill). I know this is not the smartest thing to do and will be putting it in the tenant's name in the future!!

Anyway, the tenant is about $2000 in arrears with his power bill (!) and is now claiming that he does not have to pay these arrears or any other power bill that I have given him in the past because I am not registered by the Australian Energy Regulator to sell or distribute electricity! He quotes "The legislation came into effect in June 2013 National Energy Retail Law (South Australia) Act 2011 (SA). Under the National Energy Customer Framework (NECF), the legislation is reciprocal in each State except Western Australia and Northern Territory (Electricity Law)." He says that I am in breach of the Act and is threatening to 'sue' me via the residential tenancies tribunal (called SACAT in SA). I think he is just looking for an excuse to not pay his power bill. His lease expires in August!

I would have thought that whilst this is not the ideal setup for a landlord that there must be thousands of landlords across Australia who do this, right?

Nobody, including my agent has ever heard of this before?

I would value any thoughts and help you may have on this?

Comments

  • +14

    Is the arrangement noted in the rental agreement?

    • +8

      Yes, it is clearly stated in the lease that all electricity (power) consumed by the tenant is at the cost of the tenant.

      • +39

        Call him and tell him exactly that and if it was an issue in the beginning he should have raised it then and there. Sounds like he is trying to get out of paying for electricity. Raise his rental rates, let him leave and don't return his bond.

        • +1

          Then the tenant is going to trash the landlord's house and leave some pretty nasty parting gifts…not even the bond can fix it afterwards.

        • +8

          @zan123: take out insurance .. dont worry too much

      • +7

        That pertains to retail selling of electricity, you are not selling. You make no profit and charge no gst, take it to small claims, claim interest for your "credit lending services" should cover some your fee for small claims.

        The judge will say, did you use it? Then you must pay it!

  • +42

    He's just stringing you along. While what you are doing is unorthodox, you are not supplying him with power. I own a few properties myself and would never pay a tenants bill. I do not want to be financially liable for that.

    I would write the cost off and boot the tenant out ASAP (Respecting their rights & the contract, ofcourse). They are one of those nightmare tenants that are nothing but a frustration to deal with (They want a sparkie to come out to change a lightbulb, etc)

  • +53

    WTF? electric bills, gas bills they all supposed to be under tenant name. You are asking for trouble there.

    • +1

      What about water rates?

      • +5

        Depend on your agreement, in SA you can ask tenant to pay water rates. Some only ask to pay any excess and some ask for whole amount and some don't.
        That's what agents are for, bill should be send directly to the agent, they deal with it.

      • -2

        see below ("sparkies")

      • Rates are charged on the value of the property they are connected to. Normally tenants pay for usage but not rates, but it is all bundled in the one bill.

      • Water rates are the landlords' responsibility. The tenant is responsible for the water usage component of the rates if it's charged.

    • +9

      All this stuff should be outlined in the lease.

      In VIC (assume similar elsewhere) you can be listed on a tenant "blacklist" database if you "owe the landlord more money than the bond will cover". Follow this through and make sure this happens. They might seriously regret this scam, which is what it is.

    • +4

      Regarding the water bill, I am informed by my agent that the water bill (at least in SA) MUST reside in the name of the landlord, not the tenant. All other bills (power, gas) can be put in name of tenant.

  • +64

    That's why you pay a property manager, so they can sort this out. They should have access to tenancy laws resources regarding this sort of situation and should be able to quote from the relevant section of the legislation if they actual need to go to court to recover the arrears. If they don't or can't help you, consider looking for a new property manager.

    • +5

      ^This.

      • +1

        Exactly. Why is the property manager making this your problem? They should either solve the problem to your satisfaction or you take your business elsewhere. This is just a sh!thead tenant trying it on with some legalspeak. It doesn't have a hope in hell of succeeding in court. Tell your property manager to get them to pay up as agreed.

  • +19

    I think the tenant might be technically correct in your legal position.
    If the lease notes the arrangement you have in place, however, then he should pay the bill.
    He has no standing to 'sue' you for your possible failure to be properly licensed to sell electricity, that is the government's issue. I agree it is an attempt to get out of paying.
    I would contact him and state you will be turning off the power immediately if they do not settle the bill, give notice to evict ASAP and start looking for ways to recover what you are owed via the bond.

    • +3

      I think you are right in terms of OP's legal position. I just looked it up. Seems like the right thing for the OP to have done was to register for an exemption. It is amazing how much bureaucracy there is in Australia. I guess I learn something new everyday. Personally, I think most landlords don't do it because it means they are liable for the electricity bill if the tenant did a runner.

  • +3

    I don't think there would be many landlords doing what you are doing.

    It is very very simple to change the name on a power bill….. This could be an expensive learning curve if his quoted legislation is correct. But you aren't a distributer, just the account holder.

    Hope it is mentioned in the lease somewhere that the tenant is to pay for power.

    • +1

      No doubt, it clearly states in signed lease that tenant is responsible to pay all utility bills, water, electricity, gas etc.) consumed by the tenant. Lease uses lots more words and legalities to describe this. I am just paraphrasing!

      • +1

        If that is how the lease worded the tenant may be able to get out of the daily rate for connection and only pay for the usage component. So you may still end up forking out some.

        Easier in future to let the tenant connect their own electricity provider in their own name (that is what I have always had to do as a tenant). Will also protect your credit rating.

    • +2

      Actually there are plenty of landlords doing this … ones who got a first home buyer grant and then leased out the property without waiting 6 months, and handle the bills so that it looks they live there as per the terms of the grant. Have seen this plenty of times over the past year. Recipe for disaster….

      • +2

        Haha was going to comment just this. Sounds like a FHOG maneuver to me!

  • +13

    Cut the power to the property ASAP!

    • I am guessing that cutting off electricity is not perfectly legal? You are not supposed to cut off electricity during winter in some countries. Is Australia one of them?

      • +5

        Well it is in the landlords name and tennant isnt paying for it. So why continue?

        • +1

          The tenanant says the landlord is illegally selling electricity to him….

          "Stop breaking the law" and stop selling him electricity !! Disconnect the power asap.

          Refuse his request to break the lease early. Let him leave on the condition that the lease is paid till the end. If he doesn't pay send him to a debt collector.

          Keep his bond, find some thing to blame, unclean carpets, marks on walls that needed repainting.

          He'll need to take you to the tenancy board to stop you doing these things - launch a counter claim for non payment of energy, as outlined in the lease!

        • @Orqq:

          The reason the landlord cannot "Disconnect the power asap", is because he has a large solar panel on his property.
          So even if he cuts the power off… the tenants will be enjoying free electricity from the owners investment.

          It's just the owner was silly and careless, and didn't monitor his property and payments.

          Best thing to do, is for him to evict the tenants. Swallow that $5,000 loss. And use as an (expensive) lesson learnt.

          There is a second forum about this post which has some details the OP didn't include here.
          There's always two sides to a story.

  • Yeah, I'd say tell them to pay, if not then kick them out and you can withhold their bond to cover the cost of electricity. I don't know law, but I'd say if you provide all the tenancy agreement up to now, it'd be clear that you've been paying the electricity all this time and if they do sue you, you can prove that they haven't paid and you have under no obligation required to pay their electricity.

    • +8

      good advice, that is what I plan to do. We will issue the 28 days notice of non-renewal of lease this week! thank you.

    • if not then kick them out and you can withhold their bond to cover the cost of electricity

      This won't work. The Bond is for damage to the property, not for unpaid bills. Like it or not, the OP is the one of the line here and the RTBA (Or whatever it is in other states) will side with the tenant.

      • apart from your words - do you have any facts to back up what you are saying?

      • +1

        So if let say the tenants didn't pay the last 2 weeks but left the property as new, landlord can't withhold the bond?

      • +1

        https://www.consumer.vic.gov.au/housing-and-accommodation/re…

        Under "When can I claim all/a portion of the bond?" it says:

        As a landlord/agent or owner, you can try to recover the bond at the end of a tenancy if:
        […] the tenant or resident has left you to pay bills they should have paid

        I guess that'll be your best bet then. If the tenant is persistent, you might still need to go through SACAT, but I'd say your chances are good and you will eventually get your money.

  • +16

    Cut their electricity off, simples!

    Never heard of a landlord doing this, the electricity connection and disconnection is done by the tenant when they move in and out.

    • +2

      Yes, since the power is in OP's name, they have the right therefore to disconnect it. Then it will be up to tenant to reconnect in their name. Tell them to "pull the fuse" not just switch it off.

      • +1

        But the tenant can easily phone up and connect in their name and still be able to not pay the amoutn outstanding under OPs name

  • +1

    While I agree, kick them out, can you actually do that? If what this dodgy tenant says is correct, then does that even come under a valid reason to terminate the lease? It isn't rent, it's electricity, so where does that come in, exactly I wonder. It's confusing, I'm confused, I'd call the relevant govt agency and ask your rights on this one. It's unorthodox, for sure. Good luck, tenants like that give us all a bad name.

    • +7

      If the lease is up next month he doesn't need a reason to evict them.

      • ah, good point. Still a curious one though.

    • +5

      You are right, according to the AER, I cant just cut off their power yet without going through other process first. I think the simplest and quickest is to not renew their lease due to expire at the beginning of August, thank

      • I guess you have to give notice to your tenant. If i remember correctly in Victoria we have to give 55 days notice.

  • +2

    I'd be wary of waging war against a tenant. They can do a few things to make life very difficult for you as well.

    • They are already making life difficult for him. A tenant like that is not going to improve over time and the landlord is in a lose lose situation, I think he probably will win in an court or arbitration as he isn't selling power, he is just passing on the bill (assuming he puts no fees or anything on this process). however even if he wins he has a tenant trying to screw him, get him the hell out of the property win or lose and next tenant let them put their name on the bills.

      • I would say that $2000 is quite difficult!!!

  • +16

    How did the agent explain allowing the arrears to get so high?

    • +5

      Nice pickup PJC!! I have pegged that as an issue that I will be taking up with the agent when this is all sorted. Apparently, when they got into arrears a few months ago, the agent put them on a payment plan which the tenants agreed to but they did not make any payments in the time period set by this payment plan.

      I should note however that the tenants ARE paying their rent and water bills.

      • +22

        So you're going to be $2000 in arrears for something your agent should be managing - are you stuck with these guys? I'd seriously be contemplating changing agents.

        • +2

          Yep, when the tenant issue is done, I will be doing a Pauline Hanson (aka, "please explain") on my agent. Can I sue them?

        • @GOCAT9: I have a mate who owns a few properties with deadbeat tenants arranged by 8th rate property managers (that he is in the process of ditching). I don't think you have much recourse against the useless managers though.

      • Did the agent put the tenant on a payment plan with them (the real estate agency) or payment plan with the electricity retailer?

  • +1

    So OP… did you set this arrangement so you could claim the electricity off as a tax deduction too? I hope this is not a case of having cake and eating it too.

    • +4

      No I didn't because I am not sure if this would be legal. The reason was so that I could pick up a few extra FF points. However, this was not a good judgement in retrospect as it is not worth this potential grief.!!

      • +15

        You got a bit too greedy there…

        • Sorry OP but +1000. totally agree, you're too greedy.

        • -3

          @mponderosa:

          You've said nothing to contribute to this thread.

      • +2
      • -4

        Dodgy landlord you are.

        • +3

          What's dodgy about what I did? I have not profited in any way, except for a few FF points. However, for that I have exposed myself to the integrity and honesty of my tenant which was obviously a mistake. Just curious, are you a tenant yourself?

        • +2
        • +2

          You did deprive the tenant of the opportunity to earn FF points. Maybe that's why they don't want to pay the bill now.

        • -2

          @GOCAT9:

          I am and if you tried that stunt on me I'd tell you get stuffed you shifty bastard.

        • -2

          @ykwon10:

          Oh what a peasant I am lol. (profanity).

        • +1

          @sirlothie: since when being a tenant means being a peasant? OP is asking a question and I am answering on your behalf. If speaking the truth makes you feel that way, i cant help you then.

      • and solar rebate STC credits??

  • +4

    Very foolish arrangement, imo. Sorry to say it but this was always going to happen sooner or later.

    Write it off as a lesson learnt, disconnect the power immediately and kick them out as soon as you legally can.

    • I will be using their bond to do this. I am not allowed to cut their power.

      • +2

        You may get in more trouble using the bond for this purpose without going through SACAT first.

        The best thing to do is go straight to SACAT as no reasonable magistrate would side with the tenant here. You have the paper work and the real estate agent agent on your side. You should be able to get that money back, and if the tenant can't pay then you should be able to take it from the bond (check with legal council). You have a paper trail, no magistrate

        In addition provide written notice through your estate agent that the power will be cut in 2+x weeks, and that the tenant will need to look into getting their own electricity provider, and get a new electricity plan by that date. Get your provider to cut the power at that date and don't provide electricity as part of your lease again.

      • +7

        You don't need to 'cut' their electricity. Simply close your account with the provider. The power will stay on. It will be billed to them or'the resident'. Ring the provider and tell them you don't reside at or have access to the property. I'm a landlord. My advice to you is you lost $2000, to be honest with you you did a slight scam no matter how harmless and got burned.

        • +4

          THIS ADVICE IS BRILLIANT!!! I have contacted my provider to check on what you have said and they confirm your advice. I can close my account immediately, the power will remain connected and the tenants will have to find their own provider. My liability stops as soon as my account is closed and the meter is read. Ultimately when and if the tenants sign up them selves they will be back billed to the date the meter is read. If they don't sign up with another provider then that is not MY problem and the current provider will go after the tenants themselves! Thank you so much!

        • @GOCAT9: happy to help if you have any other dilemmas just ask, I have been a landlord for many years and am currently completing my Real Estate licence. I'm sorry that this happened to you as a Landlord, there are countless malicious people ready to do such things and I'm disappointing that your property manager failed what I see as their duty of care to you.

      • ". I am not allowed to cut their power."
        No, but you are allowed to ask for a final reading on your power…

  • +31

    UPDATE: I have been contacted by the Australian Energy Regulator (AER) after I placed an enquiry with them last week. The finally got back to me. Here is the gist of what they told me:

    Technically, I am a seller and distributor of electricity, HOWEVER in my situation of a tenant and landlord I am legally DEEMED EXEMPT of requiring to have a licence! I just need to comply with a list of requirements though which are pretty reasonable. For example, I need to supply them with a copy of the bill (which I do), allow them to change providers if they request (they have never requested), not charge more than the AGL 'standard offer' rates for power. The AER use AGL as the 'standard' for power prices in this instance.

    The irony is that if the AGL rates are higher than what they have been paying, I can go back and ask them to pay the difference!! The AER told me I can do this. This would mean, their threats have potentially backfired on them. Dunno if I will do this tho!!

    • +16

      I would do it. These "people" are being a pain in the butt for no real good reason other than to try and get out of the bill. Bugger that, bill them for the difference and take their bond. Plus blacklist if possible.

    • +1

      This sounds so technical to me, you should fired the tenant and agent (giving wrong advice) the same time. Pretty soon arrears > Bond and things can get messy. I don't see a advantage of doing this, unless you have some sort of solar panel scheme or double dipping the electricity bill as TAX depreciation.
      Talk to a experience agent and re write your agreement and talk to your accountant too, that 'sometimes help.
      Clear on who is responsible for what, not just bills, maintaining as well, ie gardening.

    • +4

      Prepare a clear and simple statement of what they owe.

      At the bottom, make note of what the AER states publicly in relation to the license exemption. All in third person and not in relation to anything other than the statement.

      Give them 48 hours to pay any amounts that are more than 30 days in arrears.

      Ask the Agent to do the same. Compare both and make any necessary adjustments (make sure there are NO mistakes). Be careful, don't overstate anything.

      Get the agent to provide a 'verified' version of their to the tenant with your note, and clear instructions to collect the money they have failed to collect on your behalf so far, and to update you in 24 hours on what they have done.

      This gives everyone a chance to pay with the hope of sorting things out. After that, you can choose not to renew the lease or whatever.

      Remember that the agent will be at fault here as well as the tenant. The tenant might well be responding to poor management by the agent. It is easy for them to do what they have if they are dealing with the devil, and your agents rep/s may well be the polar opposite to them than they are to you.

    • Pays to be proactive. Well done and hope your dodgy tenant pays up.

      Boot his ass after you get what he owes

    • -6

      Just for the greed of few FF points the OP had collected by paying the bill, the issue backfired and waste so much time and money for energy of property agent, energy retailer consultant and OzBargainers :) Never been a problem if OP did not collect FF! :)

    • @GOCAT9 - just do it! charge them the higher amount. they may then negotiate to pay the actual sum.

    • You may want to make further investigations with the AER - through an employment association the company I work for holds such an exemption - there are a number of other requirements you may need to comply with (such as regular meetings with the AER, giving your clients access to discounts, informing them of government concessions they are entitled to (and passing on such concessions). It really isn't something as easy as indicated to operated as an "exempt" retailer. Please seek advice from the right people prior to proceeding (The AER).

    • Even if you don't carry through, I'd still ask for the difference.

      Use it as a negotiation tool - basically play hardball with the tenant.

      Don't expect to get it back, but 100% use it as a threat until you recover what's owed.

      If it does go to xCAT I'd ask for it to be included in the calculation.

  • +4

    Am I the only one who is wondering why would the OP have this arrangement?

    • +15

      No, the OP is wondering too! He has seen the error of his ways and will be changing the bill into the (new) tenant's name ASAP after the current tenant doesn't have his lease renewed!! Wonder no more!!

      • +7

        lol.

        Why didn't the Agent say years ago 'GOCAT9 this is a bad idea and more work for us, why don't you be like every other landlord and reduce your liability'?

        • +6

          That is an interesting point, but they did not suggest that! I am a bit pissed that they did not notify me immediately when the tenant was in arrears. If I keep that agent, I am going to give them a good talking to and tighten up their requirements for communication, thanks.

        • +6

          @GOCAT9:
          Really do not understand why you say "if I keep the agent". They have seriously stuffed up. Their primary responsibility is to collect money and they either do not have systems to ensure this happens effectively or did not take action promptly enough. They should have threatened the tenant with the tribunal and taken that action if required. Putting the tenants on payment plan was useless as they obviously did not have money problems as they were able to pay the rent.
          Sorry but i doubt you will get your money back.
          I had a similar issue with the agent not collecting rent and allowing the tenant to get over $1500 behind, this just made it worthwhile for the tenant to leave. In the end the bond did not cover the whole amount as there were repairs required.
          I complained to the head office of the agent who was a franchisee quoting lack of duty of care and they tried to blame me. They eventually offered me $500 to go away. I could not be bothered to go to the tribunal and took it.
          I had no problems for many years and grew complacent, there is no substitute for being vigilant yourself regarding money collection. What I learnt is that you need to identify a problem early on and issue eviction notice immediately and action that if necessary, because the bond only covers so much
          Honestly if you stay with this agent when you already know they are incompetent you are just asking for trouble.

    • OP mentioned in one of his replies.

      The reason was so that I could pick up a few extra FF points.

      • +2

        True Ozbargainer at heart

  • sounds like you REA is leaving you to do his/her job for them. i hope you get them both sorted out.

    • +1

      Because he's paid for it and hasn't been reimbursed by the tenant genius.

  • +4

    I'd say nice try… don't wait for him to 'sue' you at the tribunal - you take him there asap! he owes you more than the bond value and you need to act fast (knowing how property managers operate they will only waste more of your time)… I'd dare say the tribunal will say the tenant's ridiculous position is nonsensical and order him to pay all he owes you… ring tenancy advice beforehand so that your application to the tribunal isn't missing anything (they might suggest you apply for compensation & eviction at the same time)

    • +11

      I think that's good advice. I will be asking my agent to arrange a tribunal hearing ASAP. That is part of their job and they get paid to perform that work on behalf of the landlord!

      • +8

        I have also managed to get my property agent and conveyancer to repay amounts (2 separate cases, unreasonable callout fee and interest payments charged by SRO) by letting them know that they have failed their duty of care, and should pay for their mistake, or I will bring the matter to VCAT (or similar bodies). In your case, if the property agent has not notified you when arrears happened, and you are unable to recover the amount from your tenant (i.e. they disappear etc), you could possibly recover them from the property agent.

      • Check your agreement . When I used to deal with an agent they charged the landlord to turn up to the tribunal. When I took a tenant to the tribunal once the real estate representatives who were there were not organised and lost their cases - no skin off their noses they still got paid. It would be a shame to pay them more money to demonstrate their incompetence.

      • My agreement states that the REA will charge me if they have to do any tribunal hearing organisation. Check the charges section of your agreement before asking them to do anything.

    • Talk to the Bond Authority before doing anything, to confirm their understanding. best of luck.

  • If I was you, I would organize the final read in your name, then advise the tenant of that date that it will be cut off, and tell him to organise to get it reconnected in his name.

    In the mean time your going to have to consider the fact that he probably won't pay you that money unless ordered to by the tribunal, and even then may find a way out of paying by claiming financial hardship.

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