Burton, 010920 INAGO, AGO 2020-2

• Case Date: January 09, 2020
• Court: Indiana

Representative Woody Burton AGO 2020-2 Official Opinion 2020-2 Indiana Attorney General Opinion State of Indiana Office of the Attorney General January 9, 2020          Representative Woody Burton          House of Representatives          200 W. Washington St.          Indianapolis, IN 46204          RE: Municipal utilities and rental properties under Ind. Code § 8-1.5-3-8          Dear Representative Burton:          You asked for an official opinion on issues related to Ind. Code § 8-1.5-3-8, as amended in the 2019 legislative session by H.B. 1347 and P.L. 105-20191. The legislation attempted to clarify the responsibility for payment for services provided by municipally owned utilities to rental properties. You presented several questions, with the key issues summarized as follows:

• Can municipal utilities require property owners to sign for a utility account with their tenant or otherwise become a party to the service agreement?

• Can municipal utilities hold property owners responsible for a tenant’s unpaid bills?

• Can municipal utilities require property owners to pay a deposit for service to a non-owner-occupied residence?

• Can the utility charge a larger deposit based on the creditworthiness of the tenant customer?

• Can the utility deny service to a new tenant based on a previous tenant’s unpaid bills?

• Do unpaid utility bills attach to the property in any way?

• Would it be advisable to seek an amendment to the statute to provide for an enforcement mechanism against municipalities that do not comply with the statute?

         BRIEF ANSWER          If a tenant is responsible for payment of utilities under a lease, the municipal utility cannot hold the landlord responsible for payment unless the landlord is a party to the service agreement. The utility cannot deny service to subsequent occupants of the property, and unpaid utility bills do not constitute a lien on the property. Although the statute does not explicitly prohibit a municipal utility from requiring a property owner to sign for the account with a tenant so that the landlord is responsible for the tenant’s delinquent bills, such a requirement would be contrary to the purpose of the statute as a whole and may not be permissible under Indiana’s Home Rule Act.          ANALYSIS          Ind. Code § 8-1.5-3-8 applies to municipally-owned utilities. The statute does not apply to certain sewage works, or to utilities provided by a consolidated city. P.L. 105-2019 added subsections (j) and (k), which apply to property occupied by someone other than the property owner, such as rental property. The amended statute provides that utility charges are payable by the occupant if the occupant is responsible for payment of the utility charges. It also provides that utility charges for a non-owner-occupied property do not constitute a lien against the property. Subsection (k) allows a utility to require a deposit or impose other requirements “to ensure the creditworthiness of the person occupying the property as account holder or customer with respect to the property.” The statute does not describe how a tenant might become responsible for a utility bill. Presumably, the lease would specify which party is responsible for utility payment. Therefore, the legislation does not affect situations in which utilities are included in the rent and paid by the owner.          Ind. Code § 8-1.5-3-8(j) provides in part:

Subject to subsection (k), all rates, charges, and other fees for all rates, charges, and other fees for services rendered by a municipally owned utility to a property that is subject to this subsection are payable by the person occupying the property if the account or other customer or billing records maintained by the municipally owned utility for the property indicate that:

(1) the property is occupied by someone other than the owner; and

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