By Peter Vieth
Published: July 5, 2012
Tags: General Assembly, Landlord/Tenant
When a residential tenant skips town, the landlord usually can kiss goodbye the unpaid rent. But Virginia landlords had long objected to also covering the tenant’s unpaid utility bills.
Public water companies could put a lien on a landlord’s property for a tenant’s unpaid bills. Landlords protested they should not be stuck for their tenant’s water bill.
For 10 years, the General Assembly struggled to find a balance between water authorities and landlords. A compromise was struck in 2012. The new rules take effect this month.
Local governments still have the power to put a lien on a rental property for a tenant’s unpaid water bill, but the law now allows them to demand a security deposit large enough to make such liens unneeded in most cases.
The measure that emerged from a year-long negotiation was supported by a diverse coalition: the Virginia Housing Commission, apartment owners, realtors, water authorities, local governments, and the Virginia Poverty Law Center.
“No stakeholder is in love with every element of this bill, which means it’s probably a good bill,” read one report from the Virginia Water and Waste Authorities’ Association.
“We’ll see if it actually resolves that ongoing contest between landlords and public water providers,” said Mark Flynn, director of legal services for the Virginia Municipal League, which helped to broker the deal.
A group of small-scale property owners fought the bill, saying they should never be on the hook for services they get no benefit from. Their alternative bill to put the burden on utilities alone died in a House committee.
The successful compromise bill was House Bill 567. It allows public water authorities to set up service in the name of the tenant, and to require the tenant to pay a deposit representing three to five months of service charges.
If the tenant skips out on water bills in excess of the deposit, the authority has to first pursue payment from the tenant before placing a lien on the landlord’s property.
Under that system, Flynn said it should be a rare case where a water authority seeks a lien. “In 99.9 percent of cases, the security deposit will take care of the bill,” he said. Even if a customer left owing a $190 bill with a $150 deposit, “for that $40, I’d just be done,” he said.
If there is still a large unpaid water bill, the utility must use “reasonable collection efforts” to collect from the tenant, possibly including use of the state’s program to collect debts from tax returns, before seeking a lien on the property.
One benefit for the water authorities: There is no longer a requirement to obtain a judgment against the tenant in court before asserting a lien. Flynn explained that requirement worked a particular hardship on small local water authorities without access to a full-time government attorney.
There are protections for tenants who might not be able to pay the water security deposit. The local government cannot require a deposit from a tenant who is getting need-based government assistance.
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