Whose Name Should Utilities Be In With Roommates?

Put each utility account in the name of a roommate who is on the lease and expects to stay for the whole term, or split the accounts so each roommate holds one, and write down everyone's share and due date before the first bill arrives. The person named on an account is the customer the utility bills and can disconnect, and if an unpaid balance is reported to the credit bureaus, it can stay on that person's credit report for up to seven years. Some utilities spread the responsibility on their own: Pacific Gas and Electric (PG&E) in California holds every adult living at the address liable for the electric bill, whether or not their name is on the account.

Who owes the utility when the account is in one roommate's name?

Between roommates, the others owe the account holder the share you agreed to. Michigan Legal Help, a statewide legal self-help site, says a roommate who covers someone else's part of the rent or utilities and is not paid back can usually sue to recover it.

Whether the other roommates also owe the utility depends on the utility and the state:

• California (PG&E): PG&E's service rules, which the California Public Utilities Commission approves, make adults who live at the same address jointly and severally liable for the electric bills, meaning the utility can collect the whole amount from any one of them, even if only one person applied for service. PG&E's application asks for the names of the other adults living there.
• New York: the past-due bills a utility can make you pay before it starts your service are those on accounts in your own name (Public Service Law section 31). A roommate's old balance is not one of them.
• Texas: an electricity provider can require a deposit from a new customer who does not meet its credit standards. The deposit cannot exceed the greater of one-fifth of the estimated yearly bill or the next two months' estimated bills, and the provider must refund it after 12 straight monthly bills paid on time. When the account closes, any deposit still held goes back to the account holder, minus whatever is still owed.

Before you sign up, ask your utility two questions: whether it holds other adults in the home responsible for the bill, and whether it will put more than one person on the account.

Which setup spreads the risk?

Where a utility's rules make every adult at the address liable, as PG&E's do for electricity, the roommates who are not named can owe the bill in the first three setups as well. How the last two setups work:

• More than one name on an account. Under PG&E's rules, people who apply together are jointly and severally liable, and the utility sends one bill to the person the application names to receive it. That shares the legal responsibility, but one person still gets the bill and collects the others' shares. Confirm the role before adding a roommate: Columbia, Missouri, makes co-applicants financially responsible, but authorized users can discuss the account without owing the bill.
• Landlord-billed utilities. The charge becomes something you owe the landlord under your lease rather than the utility. When utilities are included in the rent, a roommate who skips their share has left part of the rent unpaid, and on a lease all the roommates signed, each of you is usually fully responsible for the whole rent. In California, a landlord that divides a building's utility costs among units cannot charge more than the actual cost. Our guide to utilities responsibility in leases covers submetered and formula-based billing.

What to agree on before the first bill

Put these terms in your roommate agreement:

1. Who holds each account. List the utility, the account holder, and the account number.
2. How each bill divides. Split equally, or weight shares by bedroom size or by who works from home, and write down which method you chose. For other ways to divide household costs, see how to split bills with roommates.
3. When shares are due. Set a date at least five days before the utility's due date, so the holder never pays late while waiting for transfers.
4. How shares are paid. Use a bank transfer or payment app that leaves a dated record, and have the holder send everyone a copy of each bill within two days of receiving it.
5. Who funded any deposit. Record each person's contribution, since the utility refunds the deposit to the account holder.
6. What happens at move-out. Require written notice, such as 30 days, before an account holder leaves, and name who takes over each account.

What happens when the account holder moves out?

The holder has to close or transfer the account, and the roommates who stay need service in someone's name starting the same day. Under PG&E's rules, a customer who wants to stop being responsible must give at least two days' notice and remains liable for service until two days after PG&E receives the notice or the end date the customer gave, whichever is later.

1. Pick one switch date. The departing holder schedules the stop, and a remaining roommate schedules service in their own name for the same date. See transferring utilities when you move.
2. Settle the final bill. It goes to the departing holder. Collect each person's share before that roommate leaves, using the same split as your other bills.
3. Ask the utility whether you owe any old balance and whether it affects starting service. PG&E can review an account that moves to a spouse or roommate, but must provide immediate service during that review. If it finds the new customer benefited from the earlier service, it can require that person to absorb the unpaid charges for it, and the customer gets 30 days to submit evidence disputing the finding.
4. Fund a new deposit if the utility requires one. Agree on who pays it, and settle the departing holder's refunded deposit according to what each roommate contributed.

If the person leaving is also on the lease, see what happens when a roommate moves out early for the rent side.

What to do when a roommate stops paying their share

If you hold the account, the utility expects the full bill from you no matter what your roommates pay.

1. Pay the full bill by the due date. PG&E, for example, treats a residential bill as past due if it is not paid within 19 days after it is mailed, and it can shut off service after giving notice. If you cannot cover the whole amount, ask the utility for a payment plan; PG&E must offer a 24-month arrangement to a residential customer who says they cannot pay.
2. Ask for the missing share in writing. Send a copy of the bill, the amount owed, and a deadline, such as 7 days.
3. Keep the records. Save each bill, your payment confirmations, and any message in which the roommate agreed to their share.
4. Sue in small claims court if the roommate still does not pay. Limits vary by state; in California, an individual can sue for up to $12,500, and the filing fee is $30 to $100.

Example: electricity and internet total $180 a month, split $60 each among three roommates. If one roommate pays nothing for three months, the account holder has paid $180 more than their share ($60 x 3) and can claim that amount from the roommate.

If you are not the account holder, ask to see the paid bill each month. When the holder is the one falling behind, a shutoff notice in their name can still cut off your service, and moving the account into your name may bring the old balance with it under rules like PG&E's.