Buyer’s responsibility to change utilities after closing. This buyer wants to know who’s liable for property damage from shut off utilities after closing.
Q: On March 12, we closed on a summer home about 2 hours or so from our primary home.
Just to give you some background, the whole process was difficult because the sellers, their Realtor, our Realtor and their lawyer were not particularly cooperative and were disorganized about details related to the closing.
We had our final walk-through the day before the closing and everything we had requested be fixed after the inspection was in fact fixed. The heat, electricity and water were on as well.
Sellers Turned Off Utilities After Closing Without Informing Buyers
When we closed on the house, we were under the impression that the utilities would be rolled over to our name. Well, unbeknownst to us, the seller had called the utilities company on March 9th and requested that the heat and electricity be turned off on March 14th. We didn’t know that they did this and no one mentioned anything to us at any time.
Five days after the closing (on Sunday), we drove to the house to clean up and begin painting. When I arrived, I realized that the heat and electricity had been turned off, so I called the local utilities to turn everything back on again the next day.
On Tuesday morning, I was greeted with water spewing out of the pump outside our house. Inside, the house was flooded and everything was damaged – walls, ceilings, kitchen, floors. Needless to say I was in shock. I called my husband and he immediately drove over. We called a plumber and he came over to figure out what happened.
Turns out, during the time that the sellers had turned off the heat, the pipes froze and then burst when the heat was turned back on. We are now faced with thousands of dollars in damage. We want to know who is liable for this.
Who Is Liable for the Damage?
The Realtors never mentioned anything to us about switching the names on the account. We called the utilities company, which gave us the information about when the heat was turned off and who authorized it. The utility company said they advised the seller to tell their Realtor and the buyers, which obviously, they never did.
We have owned a home for over 30 years and have never encountered a problem of this magnitude. Also, having not bought a home in so many years, we were unaware of these little details such as rolling over the utilities bill into our name. We are totally and completely devastated and are looking to you for advice.
Buyer’s Responsibility To Change Utilities After Closing
A: I wish I had better news for you. Unfortunately, you were responsible for both insuring the property and for making sure that the utilities had been changed into your name and were working as of the moment you closed on the property.
Although you’re angry at the sellers, I believe that anger is misdirected. While the sellers might not have reminded you to switch all of the utilities (including water, gas, electricity, and cable) into your own name by the time of the closing, they gave you two extra days to get your affairs in order, by having the water and power turned off two days after the closing.
It’s also not the agent’s responsibility to tell you that you were responsible for changing the accounts, although reminding you would have been a kindness and an extra bit of service that they could have provided to a new second homeowner. If you used a real estate attorney, that attorney might also have reminded you of your obligation to get the utility accounts switched into your name immediately.
Preparing for Real Estate Closings
Whether it was because you were buying a home for the first time in 30 years or simply because you didn’t ask the right questions, you wound up with a disaster on your hands.
If you were doing something for the first time in 30 years, it seems as though you might have read up on what you needed to do. There are plenty of books out there, mine included, that cover what needs to happen in the 30 days leading up to a closing.
I hope the property was insured and that you have by now recovered from this disaster and can enjoy your second home. If you want to explore any legal options you might have, please talk to a litigator who specializes in real estate.
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How is it buyers and/or sellers always point to blame everyone else in the transaction when things such as this is clearly the buyers duty and obligation. The real estate agents responsibilities are to carry out the transaction per agreement buyer and seller signs. The Internet is flooded with buyers (and sellers also) pointing the finger at either the agents or lenders for things they should research and know themselves before making any major purchase. If you plan to buy a house, as a buyer, you should be aware of every single needed to do on your part, not blame everyone else. It’s a waste of everyone’s time!
I would say most buyers are completely unfamiliar with the process in most cases and even after extensive research it is easy to miss one of the many steps in buying a house. Paid professionals with a stake in this deal that have experience in these things should certainly be advising their clients and customers to ensure a smooth transaction.
In this case, the buyer had the utilities changed over, but the sellers had them cancelled after the day of closing. I have no remark on who is held legally liable, but it would seem to me that neither party can shoulder the full blame.
I googled this question because I’m in the same situation. However, I am the seller and not the buyer. We close in the 3rd of May, but I told the electric company to leave the utilities on until the 9th of May, which gives the buyers a full week to transfer them into their name. I also did the same with water. We do not have gas. I did this, because I thought it was a nice thing to do. Apparently; however, the seller is under NO OBLIGATION to leave the utilities on after the closing date. So the moral of the story, is, buyer beware, lol. 😀
Leaving it in your name for days past closing should not be done. It is not good for you or the seller.
It’s sad that we try to assign blame when we can avoid these terrible situations by opening up the line of communication. I hate that sellers and buyers alike hide behind their attorneys and realtors who are just trying to make a living themselves. I read through every step by step article I could get my hands on when purchasing my first home and didn’t even consider the utilities until my mom mentioned it to me. Luckily this was a couple of weeks before closing, but not everyone have an anal retentive mother watching their backs like I do.
I would say is the buyers responsibility, as there are buyers that could abuse the usage of electricity and water. In my scenario the shop was sold but the new buyer did not change the utility to their name. They rented out the shop for years under the old owners electric account, which was paid on time until the day the tenant left and used almost $30k in a month!!!. Since the new owner did not renew their tenancy agreement they were left with it and eventually sold it off to a new uninformed buyer.
Imagine the shock that happened when the utility company sued us (the original owners) for $40k for a shop that we sold 15 years ago. If we had changed the utility on the date of legal transfer of ownership, we would not be fighting a legal battle today.
That sounds like a perfectly awful experience Thanks for sharing it with our readers.
Yes, the fault be the Buyer’s, but this answer is totally “rubbing it in” unnecessarily. This sounds like to me “You should be read up on it! Shame on you for not buying my book!”
And this is coming from a seller.
J Sanders:
Thanks for your comment. Anyone who knows me, knows that I don’t subscribe to the “shame on you” philosophy. But, there is an unrealistic expectation for some buyers that somehow all of the niggling details that accompany homeownership are going to take care of themselves. Buyers need to understand what they need to do to manage this. As for buying my book, ThinkGlink.com has nearly 8,000 pages of free information on every single part of the home buying process and I encourage folks to come here and look for guidance on how to manage the home buying process.
I’m really in need of help..my family and I live in a family owned home it was just sold was going to be split but never happened, we were told we can file a lis pendent to delay things , the house still closed and was sold we still live in the home and now I just found out that the new owner put the utilities in his name and out of mine. What can I do.
Seems to me that the realtor after charging 10s of thousands of dollars for some houses needs to do something to tell the new owner. What a joke if they don’t. Realtors are a scam.
Yes and the Realtor should brush your teeth and wipe your butt for you too. After all your paying them all that money to have common sense for you.
Justin, you must be a realtor. Understand that most people buying a first/second home will not know EVERY pitfall or issue to raise no matter how many blogs/faqs they read. The point of a Realtor is to hand hold someone that is a new home buyer/inexperienced. Why else do they get 2-3% of $100,000+ deals? A secretary wage is $10-$15 an hour and covers most of the responsibilities of a real estate agent.
If they want to differentiate themselves from a secretary, then they must bring some expert knowledge to the table and have it be of benefit to their client. Make the process easy for the client or replace them with a robot/AI chatbot and let the client save 2-3% and deal with the same headaches that WEREN’T avoided when they had an agent
Seems pretty simple. Communication is definitely the key. The current owners (sellers) are responsible for the property and utilities until the closing. The future owners (buyers) become responsible for all aspects of the property at closing. We are selling a home and just contacted the utility companies to notify them that the new owners will be contacting them to assume (transfer) utilities to their names before the closing in 4 days. We notified the agent to advise the buyer to contact them to assume responsibility for the utilities on or before the date of closing. We will contact the buyer (who we know personally) to advise them of our contacts with the utility companies and their responsibility to assume. If the utilities have not been transferred to the new owners 3 days after the closing we will have them turned off. This is concerning the first property I have sold.
Russell,
Thanks for your comment. Usually, the sellers are responsible for the property and utilities until the closing. In some parts of the country, however, local custom dictates that the sellers may be responsible for a period of time after the closing, especially if there is post-closing possession. The way you’ve handled your closing is both kind and admirable. I wish all sellers were as thoughtful.
Cheers!
Ilyce Glink
Hi,
My father is selling his coop and the closing is tomorrow. He called PSEG today, the electric company, and they said they would cancel his service and turn off the electricy tomorrow evening, and that he should contact the buyer to open an account in their name. But shouldn’t they have offered to transfer to the service to the new owner once they called instead of cancelling it? I’m confused about this. Thank you.
Hi Denise,
Nope. The company did it correctly. They cancel the service and terminate the account. If they transferred accounts, then it could enable the company to go after the new owner for unpaid bills. So, they end one and start another. It’s on the buyer to call and make sure service is uninterrupted.
Thanks for your questions.
Ilyce Glink, publisher
Hi,
I bought and sold a home last year and had 2 entirely different experiences! The title company used when I bought my new home sent a notice prior to settlement that listed what was expected of the buyer and the seller, with regard to utilities and monies needed. Smooth transition.
The title company used when I sold my old home told me everything was taken care of and only what money I needed for the transaction, which included utility bills that were paid but not when the title company created the documents. All utilities, except electric, were changed. PECO sent a bill to me for the month after settlement and holds me responsible for the bill. They never sent any follow-up bills but just posted a delinquency to my credit report. I am not sure how to proceed …… if it’s my fault for not turning it off…I will pay. Was I supposed to know to turn off electric when I didn’t turn anything else off?
Any advice is welcome….thanks!
Hi moving in to a new house before my lease is up on my rental. What is the best way to handle my utilities with moving a month before my lease is up?
I recently closed on a new build home. My walk thru was four days prior to closing. The day of closing was on a Friday – with a three-day holiday following. I didn’t get the keys until after 4 pm on Friday. A few days earlier, I had called the electric company to ask how I go about transferring the utilities into my name. I was told I needed to appear personally at the electric company before that change could be made. On Tuesday, my agent called in a huff to tell me the builder was shutting off utilities as I should have taken care of everything that Friday. I hadn’t even moved into the house and lived 50 miles away. I now have a problem with a leaky shower head that no one will wants to take care off. It seems I am responsible for that now too. Seems the builder doesn’t want to send a plumber to fix it and while not living there, the water continues to drip. Not sure what to do.
The utilities should be out of the seller name the day of closing. That’s the responsibility of the seller, and the buyer to make sure they do it. Everything after that date is the responsibility of the buyer.
I am buying a trailer off of someone and was told that it was totally electric then I woke up with a cut off notice on my door for gas witch I never knew I had my heater is gas and didn’t know can I do anything
I have recently sold a house and three weeks before closing I provided all utility information to the buyer. A month after closing I realized that they still haven’t switched the utilities over to their name and I now have a power and water bill for utilities they used. Who should be on the hook for this? Is it shame on me for being nice and not just shutting it off whenever I wanted and assuming they would be responsible?
Shana,
Sadly, it is on you. You should have canceled all of your utilities for your home as of the date of sale. It was on the buyers to pick it up and get it changed. You should send them a bill or call and tell them you’re shutting this off. It’s nice that you were trying to be nice, but clearly, they either don’t understand the responsibilities of being a home buyer or they’re happy to keep you paying their bills. Either way, it’s a losing situation for you.
So sorry about this.
I closed on a house and never transferred the water account on my name, but interestingly the water company never shut off the water.
And I never got any bill in the mail.
Does this mean that the seller still pays for that bill?
It could mean that the seller is paying the bill. And, that would continue until the seller realizes it. Or, the city will send the bill to your address, and then start dunning the seller. The honorable thing is to transfer this bill into your name. Why haven’t you done that?