Academy/Utilities & Infrastructure
Utility billing
Three billing methods exist. Which one you're allowed to use, and what you can charge for it, is a state law question, not a board preference.
Associations bill for utilities three ways: folding the cost into regular assessments, submetering each unit's actual use, or allocating a master-metered bill by a formula such as square footage. Which methods are legal, what markups are capped, and what must be disclosed to owners are set by state law and your declaration, not by board preference.
Three ways to bill for utility use
Most associations pay one master-metered water or sewer bill and build that cost into monthly assessments. Every owner pays the same share, regardless of how much water their own unit actually uses.
Some associations switch to submetering: installing a meter behind the master meter for each unit, so the bill reflects that unit's own measured use. See Submetering for how that works.
A third method, often called ratio utility billing, splits the master-metered bill by a formula, such as square footage or occupancy, instead of a direct measurement. It costs less to install than submetering but bills owners for an estimate rather than what they actually used.
What state law actually controls
Whether you may switch methods, what administrative charge you may add, whether a disclosure is required, and whether any resident is exempt from added fees all vary by state. Check your own state's utility or property code before changing how utilities are billed.
Texas caps the administrative service charge on submetered water and wastewater at nine percent of the passed-through cost.
"A service charge of not more than nine percent of the costs related to submetering allocated to each submetered rental or dwelling unit."
Source: Texas Water Code 13.503(c), Texas Legislature
Texas also requires that when a bill is allocated rather than submetered, the billing agreement spell out the calculation method in writing.
"The rental agreement contain a clear written description of the method of calculation."
Source: Texas Water Code 13.5031, Texas Legislature
Florida goes further for master-metered condominiums: state law makes water or sewer service a common expense billed to every owner, even if the declaration says otherwise, when a government entity requires the association to supply that service. California's submetering statute states its purpose as both water conservation and fairness to tenants and landlords, not simply cost recovery, which shapes how that state's rules are written.
Before you change how utilities are billed
Read your declaration first. Many require assessments to be uniform, and switching to submetering or ratio billing may need an amendment before you can bill any other way.
Then check state law for what methods are permitted, whether disclosure to residents is required, and whether any administrative charge is capped. Texas, for example, exempts residents in certain subsidized housing from its added service charge; whether your state has a similar carve-out is worth confirming with association counsel. Only after both checks are clear should the board pick a method and put the formula in writing for owners.
Check yourself
Answer before you read the explanation, recalling it is what makes it stick.
Your board wants to start billing water separately instead of folding it into assessments. What should you check first?
A Texas association submeters water and wants to add an administrative charge on top of the passed-through cost. What is the maximum allowed?
A resident asks how their allocated water charge was calculated instead of submetered. Under Texas law, what must the association provide?
Sources
- Florida Statutes 718.115(1)(a), common expenses, The Florida Senate
- Texas Water Code 13.503, submetering, Texas Legislature
- Texas Water Code 13.5031, nonsubmetering rules, Texas Legislature
- California Civil Code 1954.201, submetering legislative findings, California Legislative Information, mirrored at FindLaw
Utilities & Infrastructure
Ready to see how submetering actually works unit by unit? Continue to Submetering.
Which billing methods are legal, what administrative charges are capped, what must be disclosed to residents, and whether any resident is exempt from added fees vary by state and by your governing documents.