What Can You Do in the Case of Shared Utility Meters?

When one gas, electric, or water meter serves a tenant's unit and also another unit or a common area, tell the tenant in writing before the tenancy starts, then either put that meter's account in your own name or sign a written agreement that says exactly what the tenant pays for. California and Oregon require the disclosure by statute, and New York and Massachusetts generally make the owner pay for a shared gas or electric meter. The lasting fix is to move common-area service to a meter in your name or give each unit its own meter.

What counts as a shared meter?

A meter is shared when it measures use outside the tenant's unit. Common examples are hallway or exterior lights, a laundry room, a basement, a boiler or water heater that serves more than one unit, or a second unit wired to the same panel. The tenant who holds the account pays for that outside use unless you fix it.

Signs to check before you rent a unit: common lights or equipment on the unit's breaker panel, one water heater for two units, or a unit bill that is much higher than similar units. A licensed electrician can trace which circuits run through each meter. In New York, the utility investigates a suspected shared meter when the customer of record asks.

What do state laws require?

If your state is not listed, check your state landlord-tenant code and your utility's rules before the lease is signed. California lease disclosures lists the shared-meter notice alongside the state's other required disclosures, and Massachusetts lease disclosures covers the other notices a Massachusetts lease needs.

How do you fix a shared meter?

1. Put the shared meter in your name. Open the account for that meter yourself and include the utility in the rent. This works in every state above and needs no allocation formula.
2. Move the common-area load to a house meter. Have a licensed electrician move hallway lights, laundry, and other common circuits to a separate meter in your name, with a permit if your city requires one. The tenant's meter then measures only the unit.
3. Give each unit its own meter. Ask the utility what it takes to set a separate meter for each unit. Where state law and utility rules allow, each tenant can then open an account and pay only for the unit. For Massachusetts water service, you remain the water company's customer and responsible for its bills even with a separate utility-installed meter. Charging tenants still requires an eligible tenancy, low-flow fixtures, a signed written rental agreement, and local certification under chapter 186, section 22.
4. Install submeters and bill tenants. A submeter is a meter you own that measures each unit's share of a master account in your name. Several states regulate this. Oregon requires the lease to allow the charge and explain how it is split, a bill within 30 days of the provider's bill, and no charge beyond the cost billed to you. California water submeter billing is limited to usage, a share of fixed fees, a billing fee capped at $4.75 (adjusted each year for inflation) or 25% of the usage charge, whichever is less, and allowed late fees. Massachusetts allows separate water charges only with submeters installed by a licensed plumber, low-flow fixtures, a lease disclosure, and certification to the local board of health. The unit must first qualify at the start of a new tenancy: either its first occupancy or after the previous tenant leaves voluntarily or is evicted for nonpayment of rent or a lease violation. Installing equipment and obtaining an agreement do not let you newly impose these charges on an existing tenant.
5. Sign a written payment agreement. In California, you can keep the tenant on the shared meter if you disclose it and both sign an agreement on who pays for the outside service. New York and Massachusetts do not allow this route for most shared gas and electric meters.

Rewiring or meter work has to meet local electrical code, part of the general repair duties covered in how much maintenance and repair is required by law.

What should a written cost-allocation agreement say?

Where an agreement is allowed, write it as a lease addendum signed before move-in, and include:

• The utility, the account holder, and the meter number.
• Every area outside the unit the meter serves (for example, "hallway lights on floors 1 and 2 and the shared laundry room").
• The method for splitting the cost: submeter readings, a fixed percentage, or a monthly credit.
• When you will share copies of the bills, and how either side can ask for a recount if use changes.
• How the tenant is repaid: a rent credit or a reimbursement on a set day each month.

A worked example: an electrician estimates the hallway lights and laundry account for 20% of what the tenant's meter records. The agreement sets a monthly rent credit equal to 20% of that month's bill, so a $140 bill earns a $28 credit ($140 x 0.20 = $28) and a $200 winter bill earns $40. Either side can ask for a new estimate once a year.

Utility setup is one of the steps in how to help your tenant get set up, which covers the full move-in sequence.