Reducing Risk and Avoiding Pitfalls Through Utility Billing Compliance
Understanding the complexities and rules for resident utility billing is a challenge.
Passing along water, electric, gas and other utility charges to a resident, either separately or as part of monthly rent, is loaded with administrative twists and turns, not to mention regulatory headaches, that can erode resident satisfaction if not managed right.
The key for multifamily properties is mitigating risk from fines being levied resulting from non-compliance while providing reliable billing options that maximize utility cost recovery. A secure utility management solution that ensures billing compliance and discloses costs to be recovered with residents is the best way to stay on top.
“A utility billing program does have real advantages,” says RealPage Vice President, Utility Management and Legal, Jeff Peterson. “Number one is to maximize the recovery of the utility expense and the second one is to conserve utilities. It’s human nature, when you pay for something you tend to use less. Plus, there are legal and financial risks, security risks and risk of customer dissatisfaction.”
Overcoming common pitfalls through a third-party provider
A few common pitfalls face operators in the ever changing world of utility management.
A big issue is non-disclosure of the utility cost recovery program in the lease. A typical assumption among renters is that some or all bills are included in the monthly lease. And unless specified that any or all utilities costs will be passed on, a battle can ensue.
The solution is simple, Peterson said in a recent utility management webcast. Have a conversation with resident and explain all the necessary disclosures and costs to be paid in addition to the rent.
“Much of this governed by state law,” he said. “Make sure the lease has the required disclosures that need to be in there. You should have a provider or attorneys looking at provisions to make sure they are in line.”
Assessing risk and identifying recovery
At the conference, which focuses on simplifying the future of multifamily, RealPage shared how it helps clients assess risk due to billing compliance exposure while still maximizing utility cost recovery. RealPage legal experts who have conducted in-depth reviews of utility billing practices and leases to help clients mitigate risk discussed how combining recovery analysis with risk assessment allows clients to make informed decisions about their utility recovery programs, with a full understanding of both the financial impacts and legal risk associated with billing options.
This ultimately protects companies from legal and financial risk while helping them to maximize recovery of utility expenses, something that property management companies often don’t have the expertise or resources to do on their own.
Maintaining compliance in a changing utility world
Peterson explained how to stay in compliance and away from levied fines while using reliable billing options that maximize utility cost recovery.
Changing regulations are difficult to keep up with, he said, and not maintaining compliance can cost a property management company dearly. A local regulation can change overnight.
“Things do change,” Peterson said. “Local jurisdictions change, there are state level changes, just in the legal environment. Legislation is an always evolving process and keeping tabs on all the local regulations to make sure you’re in compliance is critical. It’s a big challenge.”