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More Rules for Property Owners

There has been a trend among rental property owner or apartment managers over the last couple of years of switching from "All Bills Paid" to master-metered bills, especially in large apartment complexes and corporate apartments in Houston. This means that the rental property owner or apartment manager no longer pays for the utilities, but now makes the apartment resident pay the bill. The problem is that most apartments are not individually metered and the rental property owner or apartment manager does not usually want to spend the money to install meters for each rental unit. Because there are not individual meters to measure the apartment resident's actual usage, the apartment resident may end up paying more than their share because of how the bill is allocated, or divided. When you are ready to find apartments in Houston, you want to be sure to pinpoint a complex that follows all of the rules.

Regulating Bills for Corporate Apartments in Houston and Other Complexes

Electricity - Applies to Rental Properties with 2 or More Units
If an apartment resident lives in a rental unit where the electricity is master-metered, there are several rules the rental property owner or apartment manager needs to follow. First, the rental agreement must contain a clear written description of the method the rental property owner or apartment manager will use to allocate the bill and a statement of the average monthly bill for the previous calendar year for that rental unit. Second, a rental property owner or apartment manager may not charge the apartment residents more than the actual amount charged to the rental property owner or apartment manager. Third, the rental property owner or apartment manager must maintain adequate records that are available to the apartment resident for inspection during normal business hours. Finally, the electric bill must be separate from any other amounts due and the apartment resident shall have at least seven days in which to pay the bill.

Currently, the only approved method for allocating a master-metered electric bill is to base it on the total square footage of the living area of the rental unit.

For example, if an apartment resident lives in an apartment complex that contains five 800 sq. ft. apartments and five 1000 sq. ft. apartments, the final bill would be a percentage based on the total square footage of living space in the apartment complex. In this example, the total square footage is 5x800 + 5x1000 = 9000 sq. ft. An apartment resident who lives in an 800 sq. ft. apartment would pay 800/9000 or 8.88% of the total bill.

Water and Wastewater - Applies to Rental Properties with 5 or More Units
If apartment resident lives in an apartment complex with five or more units, and the apartment resident is billed for the water or wastewater using an allocation method, the rental property owner or apartment manager must comply with the following rules. First and foremost, the rental property owner or apartment manager must disclose in the lease agreement:

1. That the apartment resident will be billed for water on an allocated basis;

2. That the apartment resident has a right to information from the rental property owner or apartment manager to verify the bill;

3. The average monthly bill amount and the highest and lowest bill amount for all units in the past calendar year;

4. The date bills are usually issued and the date bills are usually due; and

5. A clear description of the allocation method used to calculate the bill.

A rental property owner or apartment manager has four options when it comes to allocating a water bill. Some of them are complicated so apartment residents are encouraged to contact either TCEQ or the Austin Apartment residents' Council for additional clarification. Beginning September 29, 2001 a rental property owner or apartment manager must use one of the following methods for allocating a water bill:

1. Use the number of apartment residents in the apartment resident’s dwelling as a percentage of the total number of apartment residents in all apartments.

For example, in a complex of 50 apartment residents, an apartment with two apartment residents would pay 2/50 or 4% of the total bill.

2. Recognizing that apartments with two or more apartment residents do not typically use two or more times as much water as a single apartment resident, this method assigns a fractional portion for each apartment resident in excess of one. It must use a fractional portion of no less than that on the following scale:
a) Unit with one apartment resident = 1
b) unit with two apartment residents = 1.6
c) unit with three apartment residents = 2.2
d) unit with more than three apartment residents = 2.2 + 0.4 for each additional apartment resident over three.

For example, in a complex of 50 apartment residents, an apartment with two apartment residents would pay 1.6/50 or 3.2% of the total bill.

3. So that rental property owner or apartment managers do not have to calculate the total number of apartment residents every month as in methods 1 and 2, the rules allow the rental property owner or apartment manager to use a fixed formula that estimates the number of apartment residents based on the number of bedrooms in each unit. The total number of apartment residents in the entire apartment complex is estimated using the same formula. The percentage an apartment resident pays is then determined by dividing the estimated (not actual) number of apartment residents in the apartment resident’s apartment by the estimated number of apartment residents in the entire complex:
a) Unit with an efficiency = 1
b) unit with one bedroom = 1.6
c) unit with two bedrooms = 2.8
d) unit with three bedrooms = 4 + 1.2 for each additional bedroom over three.

For example, in a complex with five one-bedroom units and five two-bedroom units, the rental property owner or apartment manager would first estimate the total number of apartment residents as 5x1.6 + 5x2.8 = 22 apartment residents. An apartment resident living in a two-bedroom unit would then pay 2.8/22 or 12.7% of the total bill.

4. A rental property owner or apartment manager may also use a method combining the square footage and total occupancy in which no more than 50% is based on square footage. The square footage portion is based on the total square footage living area of the apartment resident’s unit as a percentage of the total square footage living area of all units of the apartment complex.

For example, suppose the square footage of an apartment resident's apartment is 8.88% of the total and the total number of apartment residents living in the apartment complex is 3.2% of the total. The rental property owner or apartment manager could decide that 40% of the bill will be based on square footage and the other 60% is based on the number of apartment residents. The apartment resident would then pay .40x.0888 + .60x.032 = 5.47% of the total bill.

The information in this brochure is a summary of the subject and other pertinent matters. It should not be considered conclusive or a substitute for legal advice. Unique facts can render broad statements inapplicable

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