When purchasing or selling a property there are some important considerations with respect to utility accounts (water/sewer/electricity/gas/telecommunications) that the buyers and sellers, as well as their legal representatives, will need to consider. In many cases the seller’s existing accounts will need to be cancelled and the buyer will have to open new accounts in their name. Each of these account transfers will have different processes for doing so.

In the course of the solicitors role, there is generally a distinction between municipal/public utilities (usually sewer and water) which are often attached to the property tax account (although not always) and private utility accounts including (most often) hydro accounts, internet, electricity and gas. The latter accounts generally need to be handled directly by the parties with the buyer contacting the provider to arrange a new account, payment information, etc. With those that are linked to the property tax account (or similar accounts), they will often be adjusted between the parties on closing by the lawyers and notaries involved or, in some situations, a final meter read completed on the seller’s account and a new account initiated for the buyer to start fresh. These adjustments and final payments will sometimes require a holdback to be done by the lawyers/notaries involved to ensure the final payments are processed and the utility account is transferred without an outstanding balance. Some of those accounts will be updated to reflect the new owner’s information through the municipality, but that is not always the case. There are also sometimes hybrid accounts such as private water or other providers that need to be contacted in the process. Given the variation on properties and jurisdictions, taking the time to properly consider utility account transfers is helpful to avoid any post-closing issues.

The second aspect of utility accounts on real estate transactions that is important is verifying the accounts are current and ensuring that any unpaid balances are cleared in the course of closing. Generally speaking, for municipal utility accounts, this would be done by the lawyers and notaries assisting both the buyer and seller. This is often because outstanding balances on these types of accounts can be transferred to the property tax account creating potential risk for the buyer. In some cases, there will be deposits held on those accounts to ensure payments on them are made. A buyer may have to assume the deposit and either provide funds to the utility provider, or they may be transferred to the buyer by a credit on closing.

It is important to consider what accounts are in place for each property and ensure arrangements are made to have them appropriately transferred or set up for the buyer. The buyer should consider what accounts are in place, which ones are being adjusted by the assisting lawyer or notary, and which accounts need the buyer to contact the provider to make appropriate arrangements, so bills are directed to the buyer post closing without interruptions in services.

Author: Una Kuzio

This information is general in nature only. You should consult a lawyer or appropriately qualified party before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250) 448-2637 or any of our lawyers practising in the area of real estate at the following:

• Una Kuzio: una@touchstone.law