Paying Your Final Utility Bills

Utilities accounts are very challenging things to deal with when you sell your home.

When you sell your home, you must pay (and sometimes close) any utilities accounts related to the Property. That sounds simple, but since there are so many providers, and so many billing methods, there is no one simple way to make sure that these bills are paid.

Since so many people forget to pay their final utilities, and the consequences for failure to pay these bills can be painful and expensive, you must now prove that you have paid out these utilities accounts.

Why do I care about this?

Firstly, because not paying these bills could mean you are in breach of your contract of purchase and sale.

Under most standard contracts of purchase and sale, a Seller is responsible for paying the property utilities up to the Adjustment Date set out in their contract.

Failure to pay the utilities up to the Adjustment Date means you have not met a term of your Contract.

Secondly, outstanding utilities balances from a municipality or regional district can get added to the property's tax bill if they go unpaid long enough.

This can lead to the property being sold at a tax sale. The consequences for this are significant.

Which accounts do I need to worry about?

Of course, you must pay all of your bills.

If you don't pay a private utilities or service provider such as Fortis, BC Hydro or your internet service provider, that service provider will simply chase you until you pay the bill.

It's very different for utilities provided by municipalities or regional districts, however. These accounts are often for water, sewer, recycling or other community services.

These municipal or regional district accounts often "run with the land", meaning the account doesn't necessarily close when a person sells the property.

The Buyer very often takes over the account, and is saddled with any outstanding amounts the Seller has not paid.

These outstanding amounts can be added to the property's tax bill, and, as noted above, can result in a tax auction if they aren't paid.

How do I prove I paid these bills?

You must provide a receipt from the municipality or regional district showing a zero balance on a final meter reading.

It isn't enough to show a screenshot of an amount coming out of your account, or a copy of a cheque you wrote. Nor is it enough to show a spreadsheet of the bills you pay, a printout of your bank statement or a credit card statement.

Cheques can bounce, or be cancelled, or have stop payments put on them. Credit card payments can be reversed.

Until the payment has actually cleared the account, and you have a zero-balance receipt from the utilities provider (on their letterhead), you have not met this term of the contract.

Aren't you supposed to pay my utilities for me?

Ensuring the payment of outstanding utilities has not traditionally been a part of the standard conveyancing services notaries and lawyers provide.

Our services have traditionally dealt with only the legal steps necessary to transfer the property's title from the Seller to the Buyer. Personal bills for services such as movers, cleaners, internet service providers and utilities have traditionally been paid directly by the Seller.

However, since so many people forget to pay these bills, and the consequences for failure to pay are so expensive and dangerous for the Buyer, it has become common practice to ask the Seller's notary or lawyer to make sure these bills get paid before we release the net sales proceeds to you.

If we agree to help you get these bills paid, the amounts outstanding are always your responsibility.

We will pay these amounts from your net sales proceeds. If you do not have enough money in your net sales proceeds to pay these amounts, then you must find the funds necessary to ensure these bills are paid.

We do not guarantee payment of these bills, nor will we pay them from our own funds.

The work required to ensure your utilities bills are paid from your sales proceeds varies depending on the municipality or regional district that provides the services.

Some service providers will not allow notaries or lawyers to request or pay final meter readings, for privacy purposes.

When this happens, you must order the final meter reading yourself. You can pay this final meter reading yourself, or give it to us to pay from your net sales proceeds.

If we are asked to ensure your utilities bills are paid (regardless of who actually pays them), we will hold back funds from the sale of your property until we can make sure that these bills are fully paid.

The amount of funds we hold back depends on the type of utilities involved, how frequently they are billed out, and the average amount of a normal billing. Some holdbacks can be in the thousands of dollars.

Since the amount of work involved in ensuring your utilities is paid can be significant, and is not normally included in the fees we charge for the work we do for you, we might charge you additional fees for this work.

When do I get my holdback funds back?

If we are paying your utilities bills on your behalf, then we keep the holdback funds until we can prove that your utilities bill was paid out in full.

This could take a few weeks, or even a few months. Much depends on on who is issuing the bill, and whether you arrange for the final meter reading to be done and paid, or we do.

We review our holdbacks monthly to see which can be released, and which still need to be held.

If the municipality or regional district will not allow us to obtain a final meter reading ourselves (due to privacy reasons), we will ask you to work with the provider to issue a final meter reading. Once you have provided us with a zero balance final meter reading, we will release the holdback funds to you.

But I have a tenant - they are supposed to pay the utilities!

You are the owner of the property, and therefore you are responsible for paying all of the utilities accounts related to the property, even if you have an agreement that your tenant will pay the utilities.

If the tenant is staying on, and the Buyer agrees that no adjustments or promises should be made about you being required to guarantee that the utilities have been paid, great! But unless you have an agreement with the Buyer about this, you are required to ensure these bills are paid.

Call us. We would be happy to help you with your real estate needs.