Billing Tenants for Utilities: Submeters, RUBS and Disclosure Rules
Texas and California rules for passing utility costs to tenants: lease disclosures, no markup over the bill, and caps on service charges and late fees.
By Seayora Editorial Team · Published · Facts checked · 4 min read
Short answer: A landlord who bills tenants for master-metered utilities must disclose the method and generally may not charge more than the utility charged. Texas requires a lease to describe how nonsubmetered water is allocated and state the prior year’s average monthly bill, caps late fees on water bills at 5%, and limits submetered water to the utility’s cost plus a service charge of up to 9%. California requires written disclosures before the lease when water is submetered, and when a tenant’s gas or electric meter serves areas outside the unit.
Key takeaways
- Texas, allocated (RUBS) water: the lease must describe the allocation method and the previous year’s average monthly bill, with no charges above the utility’s actual charges (Water Code § 13.5031).
- Texas, submetered water: the utility’s cost per gallon plus taxes and surcharges, and a service charge of up to 9% except for tax-credit units and voucher holders (Water Code § 13.503).
- Texas: a late fee on a water bill may not exceed 5% of the bill paid late.
- California, submetered water: a written disclosure before the lease, including an estimate of the monthly bill and the only charges allowed (Civ. Code § 1954.204).
- California: if a tenant’s gas or electric meter serves areas outside the unit, the landlord must disclose it and agree in writing how it is paid (Civ. Code § 1940.9).
Can a landlord bill tenants for water and other utilities?
Usually, if the lease provides for it and state law is followed. There are two common methods. Submetering measures each unit’s actual use with its own meter. A ratio utility billing system, or RUBS, divides a master-metered bill among units by a formula such as floor area, bedrooms or occupants. States that regulate either one tend to require the same three things: a clear disclosure before the tenant signs, no markup over what the utility charged, and records the tenant can inspect.
What are Texas’s rules for allocated (RUBS) utilities?
For nonsubmetered master-metered utilities, the Water Code requires the Public Utility Commission’s rules to require that the rental agreement contain “a clear written description of the method of calculation of the allocation” and a statement of the average unit monthly bill “for the previous calendar year”; that the owner not impose charges “in excess of the actual charges imposed on the owner”; that the owner keep records of consumption, the utility’s bills and the allocation and make them available to tenants during normal business hours; and that a late fee on an allocated water bill not exceed 5% of the bill paid late (Tex. Water Code § 13.5031).
What can a Texas landlord charge for submetered water?
An owner may not impose on the tenant “any extra charges, over and above the cost per gallon and any other applicable taxes and surcharges” charged by the utility, must keep submetering records open to the tenant, and may charge a late fee of no more than 5% of the bill paid late. The rules authorize a service charge of “not more than nine percent of the costs related to submetering,” but not on a resident of a unit with low-income housing tax credits or a resident receiving Section 8 tenant-based voucher assistance. Submeters are held to the commission’s accuracy and testing standards (Tex. Water Code § 13.503).
What must a California landlord disclose for submetered water?
Before executing a rental agreement, a landlord who intends to bill separately for water in a property with submeters must disclose in writing, in at least 10-point type: that water is billed separately; an estimate of the monthly bill, based on the average or median bill for comparable units over any three of the past six months, or on a family of four using about 200 gallons a day; the due dates and how to pay; a mailing address, email address and phone number for billing questions; the only charges the bill may include; the tenant’s right to see the submeter’s location, the calculations and its certification dates; and how to dispute a reading, including contacting the county sealer (Cal. Civ. Code § 1954.204).
The bill itself may include only the tenant’s volumetric usage priced in proportion to the utility’s bill (or, for a tiered rate, by splitting each tier evenly among units), a share of the utility’s fixed charges, either by the tenant’s share of usage or equally per unit, a capped billing fee that may rise each year with the Consumer Price Index, and a late charge allowed by § 1954.213 (Cal. Civ. Code § 1954.205).
What if a tenant’s meter serves common areas?
If a California landlord knows that gas or electric service through a tenant’s meter serves an area outside the tenant’s unit, such as a hallway light or a laundry room, the landlord must disclose it before the tenancy begins or on discovery, and either sign a written agreement with the tenant to pay for that service or make another written arrangement, such as becoming the utility’s customer for that meter. If the landlord does not, a tenant can ask a court to require the landlord to become the customer of record and to reimburse what the tenant paid for service outside the unit (Cal. Civ. Code § 1940.9).
| Rule | Texas | California |
|---|---|---|
| Disclosure before signing | Allocation method and prior-year average bill in the lease | Submetered water: written disclosure with an estimated monthly bill |
| Markup over the utility | None, beyond a capped service charge on submetered water | Only the listed charges, including a capped billing fee |
| Service or billing fee | Up to 9% on submetered water; none for tax-credit units or voucher holders | A capped fee, adjustable yearly by the CPI |
| Late fee | No more than 5% of the water bill paid late | As allowed by Civ. Code § 1954.213 |
| Records | Open to tenants during business hours | Calculations and submeter details on request |
Frequently asked questions
Is RUBS billing legal?
In many states, if the lease discloses it and the charges do not exceed what the utility billed. Texas requires the lease to describe the allocation method and state the prior year’s average monthly bill.
Can a landlord add a fee to a water bill?
Only as the state allows. Texas permits a service charge of up to 9% on submetered water, except for tax-credit units and voucher holders; California allows only a capped billing fee among a short list of charges.
What if my apartment’s electric meter also powers the hallway?
In California the landlord must disclose it and agree with you in writing on who pays for that service; otherwise a court can make the landlord the customer of record and order reimbursement.
Sources
- Texas Water Code Chapter 13 (§§ 13.503, 13.5031), Texas Legislature
- California Civil Code § 1954.204, California Legislative Information
- California Civil Code § 1954.205, California Legislative Information
- California Civil Code § 1940.9, California Legislative Information
How Seayora helps
Utility billing: Splits a utility bill by equal shares, floor area, bedrooms or occupants in exact cents, charges vacant units to the owner and records your attestation.
This article is general information, not legal advice. Landlord-tenant law varies by state and city and changes often, so check the current rule for your property and talk to an attorney before acting on a dispute.
How we write and check these guides: editorial standards.
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