Shared Utilities Agreement

Last Updated: October 27, 2023 by Savannah Minnery

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What is a Shared Utilities Agreement?

A shared utilities agreement is a legal contract between a landlord and a tenant that can be incorporated into a residential lease agreement. This agreement specifies which utilities will be shared with another unit or common area within the building.

Why Include a Shared Utilities Agreement in a Residential Lease?

Some cities require landlords to disclose if utilities are being shared between multiple units. However, it is always a good idea to be as transparent as possible when it comes to utility payments. This helps build trust with tenants and prevent future miscommunication or liability issues. Landlords should:

  • Specify which utilities are being shared
  • Disclose the method for calculating utility charges
  • Explain any additional service fees (if applicable)

Should Landlords Put a Cap on Utility Use?

Buildings with shared utilities arrangements may run into issues such as tenants overusing utilities. In these cases, landlords may decide to put a cap on certain utilities to prevent tenants from either overpaying or underpaying for services. For example, the utilities agreement could state that if the monthly bill exceeds a certain amount, the landlord will include any overage in the tenant’s next rent payment.

What to Include in a Shared Utilities Agreement

Landlords should include the following in a shared utilities agreement:

  • Type of Agreement The heading and opening should state that this is a shared utilities agreement.
  • Lease Date The date of the original lease should be included.
  • Agreement Date Landlords should include the date that the agreement is signed and goes into effect.
  • Name and Address – The names and addresses of both the landlord and tenants should be included.
  • Signature and Date The agreement should be signed and dated by both the landlord and tenants.
  • Landlord’s Disclosure – The landlord should disclose which utilities will be shared by multiple units
  • Payment – The Landlord should include information on payment, including additional fees and when it is due.

It is important to note that certain areas prohibit the use of a shared metering system—meaning that tenants are not required to pay utility costs outside of their personal unit. Landlords should research local laws and regulations beforehand.