Brown Gavel

Friends Don’t Let Friends Get Sued

We talk a lot about the rewards of utility recovery because there are so many. Owners receive relief from inflation, utility rate increases, excess consumption, and increased NOI as a result.

What we don’t talk about a lot is correctly designing your utility program to comply with all of your local regulations. We don’t talk about it because, to us, that’s table stakes.

Our first step in working with any new client is ensuring anything we suggest is fully compliant with local regulations. In particular, the regulations around ratio utility billing systems (RUBS) vary widely across the country. In some places, RUBS programs are expressly forbidden. In other areas the law is silent, or there are caps, or limits on fees. As a utility billing provider, it is our duty to understand these regulations and ensure our clients have a program that can be defended.

One of the reasons we advise you don’t use RUBS calculators or tools built-in to your PM software is that they are generic and don’t account for the nuance in local and state regulations.

The last thing you want when migrating to a utility recovery model is to be sued by your local public utilities commission, but that’s exactly what is happening in Multnomah County in Oregon.

A real estate services company is being sued in a class action for $16,800,000.00 for violating local regulations regarding utility bills. Maybe this case will be dismissed, maybe they will settle, maybe they will go to court and set a new legal precedent. Regardless of the outcome, this will cost the owners of the property a significant amount of money in legal fees, and a great deal of stress.

So, what went wrong? The Plaintiffs accuse the Defendants of failure to disclose fees in the lease language. While we are not lawyers, another thing we do is provide information to our clients on what they need to include in their lease so they can have their attorney ensure they are compliant. Much of this is documented in the local regulations. The final step is clear communication to the residents so they understand when they sign or renew what bills they will receive, and from whom.

It’s easy to avoid these issues if you use a billing partner that does this research for you, and you prioritize educating your residents to the services provided and the associated cost.

If you want the most accurate evidence of usage, then submeters are the way to go. We can help you get an excellent quality product at a competitive rate.

If you want some help, we’re happy to provide a free consultation.