This article is part of a series of 10 reels chronicling my journey to evicting my tenants and dealing with all the consequences. You can watch all 10 parts by heading to my Eviction Day Prep.  

If you are currently dealing with eviction and don’t know where to start, I documented all the preparations I made into a Getting Ready for Eviction Day Template that you can have for free! 

My tenants have been evicted, hooray! Months of unpaid rent and hostile communication finally found a resting place and I have my house back.  However, eviction was not the final step to a long, drawn out battle to reclaim my house. 

At this point, I had cleaned up junk, my partner shoveled literal dog sh*t, (yes, and you can read all about it in my article How to Handle Junk Left Behind by Evicted Tenants), and I was spending money just to get my house back in order. 

Fine, I thought to myself, “At least it’s over!”. I wanted to move on. A naive thought. Watch and read on. 

Two months after my tenants were evicted, I was presented with another gift.
A $700 water utility bill.
Many cities in Ontario, if the water and sewage bills are left unpaid by the tenant, the City will come after the homeowner to pay it off. That’s even if the account is registered under the tenant’s name. Had I known, I would have called in to the City to check the account periodically.
-Weiting Bollu, Co-Founder, Openroom

And there it is. Unpaid utility bills. I got caught off guard. I learned through sweat, tears, trial, and (LOTS) of error. My hope is that you are equipped with the right knowledge and never have to face the shock I did. 

What does it mean when I say the City will come after the homeowner even if it is under the tenant’s name? How does this happen? How do I transfer the bills to my tenant? What laws do I need to be aware of going forward?

In this article, I explain all things utility bills and tenants. The Municipal Act. Property taxes. The consequences of unpaid bills. 

Be over-prepared. Because this is not an anomaly in the world of small landlords. 

Utility Bills, the Municipality, Landlords, and Tenants

How does the city deal with water bills when a tenant is renting a property that is under your name? 

How cities in Ontario manage water bills for tenants

Many cities in Ontario have specific processes in place on how to manage payment of water bills. Some allow property owners to place the bill under the tenant’s name. Other municipalities, like the City of Toronto, will send a copy of the bill to your tenant but the bill remains under the landlord’s name.

You would typically find this information either on the city’s website or through contacting your city’s local distribution company. You can Find Your Local Distribution Company through the Independent Electricity System Operator’s database. It is a comprehensive list!

To give you an idea on how this works, I have compiled some information from a few cities and how they manage water billing between landlords and tenants.

When a tenant defaults on paying their water bill

In the same way that some cities offer ways for you to provide your tenants with water bills, they also outline late payment charges for defaulting tenants. Each city will have its own by-laws that lists out the late charges. You will also find this on your city’s website. 

The table below gives you a rough idea on how the charges work.

You might think that this does not happen often. Wrong. It happens more often than not, and tenants have more unpaid water bills than homeowners living in their property. The issue of tenants defaulting on water bills have garnered significant political attention in the past few years. 

A 2021 report by the treasurer of the Town of Collingwood showed some interesting statistics. The town had $235,100 in arrears for water. Out of this amount, $126,400 were from tenant accounts. This means that 54% of unpaid water bills came from tenant accounts.

In 2022, a B.C. landlord loses bid to evict renter over $3K in unpaid utilities, as reported by CTV. The non-payment of water bills by tenants have reached municipal debates in the Collingwood, City of Cambridge, Barrie, and Saskatoon. Like I said, this is not an anomaly. 

Consequences of Unpaid Water Bills for Landlords

You didn’t cause the problem. It was not you who defaulted on paying the bills. But you will pay the price. It will show on your property taxes, water certificate and could even lead to disconnection of water supply to your property.

Unpaid amounts to your property tax roll with extra fees

Late charges will continue to accrue. 

At the end of the year, any unpaid balances on the part of your tenant will be accumulated and added to YOUR property tax. This often also includes an additional fee on top of that. The City of Toronto will add all unpaid amounts, plus interest, plus a fee of $48.65 to your property tax!

Water certificate

Water certificates give details about any unpaid balances on water accounts and are commonly requested when buying or selling a property. You or a lawyer can request one from the city when finalizing a real estate transaction. Any unpaid amounts will show here and adversely impact the value of your property.

Water disconnection

In some cases, the city may disconnect your property’s water connection. Such is the case for the Municipality of North Grenville, where water supply is disconnected for houses with unpaid water bills exceeding 90 days. Due notices will be sent to the customers first. 

Ensuring your contact details with the city are up to date will allow you to act on this before it is too late. Most often, cities charge a reconnection fee to restart water supply to your property. This is on top of unpaid amounts and interest on those amounts!

Ontario’s Legislation Allowing Transfer of Unpaid Water Bills to Property Taxes

In Ontario, municipalities have the authority to manage various services like water, gas, sewage, and waste management. To ensure that residents pay for these services, municipalities work under a legal framework, which includes Ontario regulations and the Municipal Act. Together, these laws enable municipalities in Ontario to manage and collect unpaid utility fees  

Here's how they relate and how fees are handled:

Relationship between Ontario Regulation 581/06 and the Municipal Act

Municipalities provide essential services, and when residents fail to pay their utility bills, the municipality has a way to recover those costs. Ontario Regulation 581/06 gives certain utility fees and charges "priority lien status." This means that if someone doesn't pay for services like water or waste management, these unpaid charges can be added to their property taxes, ensuring the municipality can still collect the money.

Municipal Act, 2001, Section 398(2) 

The Municipal Act grants municipalities broad authority to collect unpaid utility charges. Section 398(2) of the Municipal Act explains the process municipalities can follow to recover unpaid utility fees:

Amount owing added to tax roll

(2) The treasurer of a local municipality may, and upon the request of its upper-tier municipality, if any, or of a local board whose area of jurisdiction includes any part of the municipality shall, add fees and charges imposed by the municipality, upper-tier municipality or local board, respectively, to the tax roll for the following property in the local municipality and collect them in the same manner as municipal taxes:

1. In the case of fees and charges for the supply of a service or thing to a property, the property to which the service or thing was supplied.

2. In all other cases, any property for which all of the owners are responsible for paying the fees and charges.

The treasurer of the municipality can add unpaid utility fees, such as water or waste management,to the property tax roll. This includes the power to add these debts to the property tax bill of the landlord, even if the utilities were in the tenant's name.  

The specific steps can vary, but generally include issuing reminders, late notices, and final warnings to tenants before transferring the debt to the property owner. Once added, these unpaid fees are collected in the same way as property taxes.

Ontario Regulation 581/06 

Ontario Regulation 581/06 ensures that specific public utility services provided by municipalities, such as water supply, gas supply, sewage systems, and waste management, have priority lien status:

Certain public utility fees and charges

Fees and charges that are imposed by a municipality or local board under the Act for the following services and added to the tax roll under subsection 398 (2) of the Act have priority lien status as described in section 1 of the Act:

1. For the supply of water.

2. For the supply of artificial or natural gas.

3. For the supply of steam or hot water.

4. For the use of a sewage system..

5. For the use of a waste management system.  O. Reg. 581/06, s. 1; O. Reg. 566/07, s. 1.

This means if a resident doesn’t pay for these services, the charges can be added to their property tax roll. Once added, these fees are treated as if they are taxes owed to the municipality. This gives the municipality a strong legal tool to ensure residents pay for essential services.

A Landlord's Guide to Protecting Their Property

While all of this may seem like a burden, there are ways you can protect and empower yourselves! You've already taken the first most important step, learning. Now that you know, let's talk about what you can do to protect you, your property, and your money. Here are two important ways you can mitigate the risk of having to pay your tenant's water bills.

Ensure a comprehensive lease agreement

A comprehensive lease agreement is your first line of defense against utility payment issues. 

When drafting your lease, include specific clauses that clearly outline the tenant's responsibility for utility payments. These clauses should state which utilities the tenant is responsible for, how they should be paid, and the consequences of non-payment. Consider including a clause that requires tenants to provide proof of utility payments upon request.

Note that some municipalities and local distribution companies will not release information on bill amounts to anyone other than the account owner. If the water bill account will be under your tenant’s name, you may have to get your tenant’s consent to check if the bills are paid. 

Consult with your municipality or local distribution company on what they need to authorize you and ensure you have these documents signed and completed at the very beginning of your tenancy. 

Periodically check

Stay on top of it! Establish a routine schedule for checks. Most municipalities issue water bills quarterly, so be sure to note the billing dates and set reminders in your calendar.

1. Follow Up with the Municipality: Reach out to the local water utility company around the billing due date to confirm whether payments have been made. This can often be done online or through a customer service call.
2. Request Payment Confirmation from Your Tenant: As part of your regular communication, ask your tenant for proof of their water bill payment. This can be in the form of a receipt or confirmation email. Make it clear in your lease that this is a requirement.
3. Document Your Checks: Keep a log of your communications and confirmations regarding water bill payments. This documentation can be useful if any disputes arise.
4. Address Non-Payment Promptly: If you discover that a bill has not been paid, address the issue with your tenant immediately. Review your lease agreement’s consequences for non-payment, and consider setting up a plan for them to rectify the situation.

By implementing a periodic check-in system, you are being proactive. Stay on top of it. This is your property and your finances, don’t shut an eye on the little details.

Concluding Thoughts

This is all I will say for now on this matter. I hope this helped you in some ways and empowered you in others. No matter what the challenge, you got this! And we here at Openroom are here to help. 

Remember, the laws surrounding utility payments are designed to protect municipal interests, but as landlords, you have the power to safeguard your own. By staying informed and engaged, you can avoid the pitfalls that many landlords face. Utilize the resources available. Here at Openroom, the Virtual Rental Housing Provider Training Program is designed to help you equip yourself with the knowledge and tools necessary for successful property management. Your diligence today can lead to a more secure and profitable rental experience tomorrow!

To learn more about the process leading up to my eviction, read The Landlords Guide: When Tenants Are Not Paying Rent in Ontario and A Landlord's Guide to the LTB's N4 - Notice to End a Tenancy Early for Non-payment of Rent. 

If your tenants have been evicted but they still owe you rent, read Debt Recovery: How to enforce an LTB order in Small Claims Court and the Landlord’s Guide to Skip Tracing and Examination Hearing in Ontario.

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