Navigating utility responsibilities in California rental properties can be complex. Both landlords and tenants have specific rights and obligations under California landlord-tenant law, and failing to understand them can lead to disputes, fines, or even lawsuits. From billing transparency to liability for unpaid water bills, utilities are a major part of managing rental housing. This guide explains landlord utility responsibilities, tenant billing rights, and new disclosure rules that will soon reshape how utilities are handled in California leases.
Key Takeaways
- California landlords must ensure essential utilities like water and electricity remain available as part of habitability.
- Tenants cannot be overcharged for utilities—landlords may only pass along actual costs with limited administrative fees.
- Utility billing methods such as submetering and RUBS require detailed disclosures, and new legislation (AB 1248) will ban most RUBS starting in 2026.
- Clear lease agreements and documentation prevent confusion, disputes, and potential legal liability.
Table of Contents
- California Utilities Law at a Glance
- Utility Billing Methods & Legal Requirements
- Tenant Rights and Transparency Protections
- Looking Ahead: New Requirements (AB 1248)
- Best Practices for Lease Drafting & Documentation
- Conclusion
California Utilities Law at a Glance
California landlord-tenant law is built on the principle of habitability. This means every rental unit must provide access to essential utilities such as water, heat, and electricity. A landlord who fails to maintain these systems risks being found in violation of the implied warranty of habitability.
Just as importantly, landlords are prohibited from shutting off utilities to force a tenant to leave. Utility shutoffs used as a self-help eviction tactic are illegal in California. Even if a tenant falls behind on rent, utilities must remain available until a lawful eviction process is completed.
Utility Billing Methods & Legal Requirements
Direct Tenant Utilities vs. Landlord-Paid
The lease agreement determines who pays for utilities in California rentals. Landlords are not automatically responsible; however, if the lease assigns utilities to tenants, those obligations must be honored. Landlords who keep utilities in their own name may bill tenants back, but charges must reflect the actual costs.
Submetering vs. Ratio Utility Billing Systems (RUBS)
Many multi-unit properties use submetering, where each unit’s consumption is measured individually. Submetered tenants have the right to see itemized billing that includes meter readings, current service rates, and the amount owed.
By contrast, RUBS allocates costs based on a formula—such as square footage or number of occupants—rather than exact usage. California allows RUBS only under limited circumstances, and major restrictions are coming with AB 1248.
Limits on Charging
Landlords cannot profit from utilities. They may only pass along the actual costs billed by the utility provider. While an administrative fee may be added, it must be reasonable and directly tied to the cost of billing management. Overcharging tenants for utilities can result in penalties and tenant claims.
Tenant Rights and Transparency Protections
Right to Know Costs and Billing Details
Tenants have the right to transparency. If utilities are shared or billed through a submeter, landlords must disclose how usage is calculated and provide detailed billing information. Tenants should always know how much they are paying and how charges are divided among units.
Liability for Unpaid Utility Bills—Why Water Is Different
Generally, the party named on the account is responsible for unpaid bills. However, in California, water and sewer bills often remain the landlord’s responsibility even if the tenant fails to pay. Municipalities may place liens on the rental property to recover unpaid water charges. For this reason, many landlords include water service in the rent to avoid exposure to unpaid bills while collecting rent separately.
Looking Ahead: New Requirements (AB 1248)
California Assembly Bill 1248, effective April 1, 2026, will change how utilities can be billed. Most RUBS arrangements will be prohibited, except under narrow rules for water and sewer charges. Landlords who advertise rentals will also need to include all mandatory fees, including estimated utility charges, in the listed rent. Additionally, prospective tenants must be provided with two prior utility bills and a clear explanation of any allocation formula before signing a lease.
These changes increase transparency and shift responsibility onto landlords to provide accurate disclosures. Updating lease templates now can help landlords prepare for compliance.
Best Practices for Lease Drafting & Documentation
To prevent disputes and remain compliant, landlords should:
- Clearly define in the lease who is responsible for each utility.
- Specify whether accounts will remain in the landlord’s name or be transferred to the tenant.
- Provide full disclosure of billing formulas, submeter data, and allocation percentages when applicable.
- Keep records of utility bills and make them available to tenants upon request.
- Allow exceptions for tenants with medical conditions requiring life-support equipment, as they may need direct access to utility company programs for discounted rates.
Conclusion
Utility responsibilities in California rentals are not just about who pays which bill—they reflect broader tenant rights, landlord obligations, and compliance with evolving state laws. From habitability to billing transparency and new disclosure rules, landlords must stay proactive. Clear documentation and fair billing practices help avoid disputes, ensure compliance, and create more stable rental relationships for both landlords and tenants.