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Lets talk Utilities: Utilities and Residential Tenancy Law
By Daniel Greanya
How to handle utilities is often a major issue between landlords and tenants. It also raises legal issues given the state of the law and how it has been applied. Historically it was customary for utility payments to be included in the rent, which means that tenants would pay the same rent regardless of how much utility costs were. More recently, some landlords have chosen to make tenants pay their own utilities. Landlords like this approach because they do not have to worry about fluctuating bills and tenants have an incentive to save money. There are some challenges with this new approach.
Under the Residential Tenancies Act, rent is defined as
“…the amount of any consideration paid or given or required to be paid or given by or on behalf of a tenant to a landlord or the landlord’s agent for the right to occupy a rental unit and for any services and facilities and any privilege, accommodation or thing that the landlord provides for the tenant in respect of the occupancy of the rental unit, whether or not a separate charge is made for services and facilities or for the privilege, accommodation or thing…”
This definition is very broad, and would clearly include utility payments. This must be read in combination with section 168(2), which gives the Board exclusive jurisdiction over residential tenancies and matters raised under the Residential Tenancies Act. It would seem that this would mean that the Board has exclusive jurisdiction to hear applications related to utility payments, and to order payment of utilities.
The Residential Tenancies Act contains a comprehensive scheme regulating rent amounts and preventing rent increases during a tenancy. Under the Act, rent must be increased by notice only one time per year. Yet if utility payments are considered rent, and they by definition fluctuate, then how would this fit into the scheme?
The Landlord and Tenant Board Interpretation Guideline 11 and the Board’s case law, deals with this issue. The Board has maintained, if a tenant pays for utilities directly, then utilities are not included in rent. If costs are paid by the landlord and reimbursed by the tenant, the costs are included in rent only if the costs are unchanging on a month to month basis. Most utilities under this interpretation are not considered by the Board, and cannot be claimed in an application for nonpayment of rent. The exception is where the landlord pays utilities and the tenant reimburses them for a fixed amount.
This interpretation by the Board seems at odds with the definition of rent listed above. If the Board does not admit jurisdiction in these matters, a landlord’s only option is to take the matter to Small Claims Court. Most decisions of the Small Claims Court follow the practice of the Board and award reimbursement of utilities as a debt owed the landlord, but not as rent. Some however use the definition of rent to deny claims on the basis that they do not have jurisdiction. This gives a landlord no recourse to recover amounts of utilities owed to them. The treatment of utilities is an area ripe for appeal; and it would be beneficial for all parties to know where these matters should be brought.
If you are in need to collect unpaid utilities from tenants, it is important that you do it right and bring it to the right place. Greanya Legal Services can help with this and other residential tenancies situations. Now for one final tidbit:
Payment of water bills are different from other utilities. Municipalities who provide water services will not as a general rule transfer utilities into a tenant’s name. If water bills are not paid, unlike other utilities the amounts will be added to the property tax bill. A landlord can request that a tenant reimburse them, but if the tenant does not do so, the landlord is stuck paying the bill and cannot allow the water to be shut off. For this reason, I usually recommend that water be included in the rent, even if other utilities are not.