Utility bill: The 8 best landlord tips at a glance

1) Tenancy agreement: Agreeing on the apportionment of utility costs

Under Section 556 of the German Civil Code (BGB), landlords and tenants can agree that the tenant shall bear the operating costs. If no such agreement is made, the landlord bears the operating costs. A costly mistake that happens time and again.

Landlords must agree on passing operating costs on to the tenant in the lease agreement and explicitly name every single operating cost item or refer to Section 2 of the Ordinance on Operating Costs. Only then is it ensured that the landlord does not have to bear the incidental costs.

2) Punctuality: Please observe the billing deadlines

The landlord has exactly 12 months to prepare a utility bill. The so-called „billing period“ begins with the end of the accounting period. If the landlord calculates by calendar year—that is, from January 1 to December 31 of a given year—then the bill must reach the tenant by December 31 of the following year.

If the landlord misses this deadline, any additional payment claim is excluded. But watch out: the tenant, on the other hand, only loses their claim to a credit balance after several years (under certain circumstances, not even at all).

3) Period: The landlord may bill for a maximum of 12 months

The above-mentioned billing period is just as important as the billing deadline. The landlord may only bill for utility costs or advance payments over a period of 12 months. If the landlord attempts to bill for a period of 13, 14, or an even longer timeframe, for example, the utility bill is not properly prepared, and any potential additional payment owed by the tenant does not become due.

4) Property tax: Please don't forget

This tip is especially important when preparing the utility bill for condominiums. All costs that arise are paid by the homeowners association. The landlord receives a maintenance fee statement once a year and can pass on large parts of this statement to their tenant.

However, one item does not appear in the statement of homeownership costs (which the landlord uses as the basis for the utility bill): property tax. Property tax is paid by each condominium owner themselves. Therefore, passing on the property tax is easily forgotten. Conscientious landlords know this special feature and pass the property tax on to the tenant.

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5) Please don't forget anything: bill for all pass-through costs

This tip follows the „forgotten property tax.“ Because it's easy to forget not only the property tax in the utility bill statement, but also other items. Organization on the part of the landlord is half the battle when it comes to billing. If receipts are filed carefully and presented conscientiously in the statement, normally no receipt (e.g., stairwell cleaning, garbage fees, or garden maintenance) can be forgotten.

It must be noted: The landlord pays out of pocket for any item that is not allocated. After the billing deadline specified in item 2 expires, it is also no longer possible to correct the utility bill.

6) Facilitation of work: Agreeing on and observing sensible allocation keys

The landlord has various allocation keys at their disposal. These are anchored in the rental agreement, and the utility bill must be prepared according to these distribution keys.

Now there are simple and rather difficult-to-handle allocation keys. It is recommended to allocate utility costs according to the square meters of living space. Each tenant pays proportionally based on the size of their apartment. This key is generally fair and easy for the landlord to handle. A negative example is the allocation according to the number of people—a distribution key that can involve a lot of work.

The landlord must always know exactly how many tenants have lived in an apartment and during what time period. Keeping track of this is not quite easy here, as new residents move in and out, children are born, or a tenant's boyfriend practically „lives“ in the apartment as well, but is not registered at the address. In practice, the key simply presents too many pitfalls.

7) Better by courier: deliver utility bill with proof of receipt

All the effort put into preparing the utility bill is of no use to the landlord if the delivery of the bill cannot be proven. Especially with bills that are delivered „at the eleventh hour,“ problems regularly arise.

Example: The landlord sends the utility bill at the end of December and reminds the tenant at the end of January to please pay the additional amount due. Now the tenant claims to have never received the bill. The landlord has the burden of proof and must prove delivery. If he cannot do so, he can write off his additional payment, because a correction is no longer possible in January (after the billing period has expired).

The safest solution is delivery via a messenger. The messenger should then not only confirm the drop in the tenant's mailbox, but also have seen the contents of the letter. This puts the landlord on pretty safe ground.

8) Basic requirements: Observe formal regulations and minimum content requirements

• Address and description of the apartment / property
• Specification of the billing period, e.g., 01/01/2012 to 12/31/2012 (In the event of a tenant change, the billing period for the respective tenant must also be specified)
• Listing of total costs by cost element
• Specification of the allocation key (per cost element)
• Specification of costs per operating cost type that are payable by the tenant
• Specification of the tenant's total costs
• Specification of the advance payments made by the tenant
• Offsetting of advance payments against actual costs = Statement of an additional payment due / a credit balance
• Explanations of the individual operating cost categories and distribution keys are generally necessary for the utility bill to be understandable

Conclusion

The list of tips can certainly be expanded by numerous points. Here we wanted to summarize the most important points for creating the utility bill. After all, time and again it is the same error-prone areas that landlords stumble over.

A final and general tip: Owners who do not want to or cannot prepare their own statements should, in case of doubt, get help with the utility bill calculation.

About the author: This guest article was written by real estate specialist Marcel Kurzke. Under the name „Promeda Hausverwaltung GmbH“Marcel Kurzke runs a property management company in Berlin specializing in rental and residential property management (WEG management). The company blog regularly features articles on various real estate and tenancy law topics.