When can a seller turn off the electricity?

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04/19/2016 | Author: TAR Legal Staff

Your seller may have moved out of the property, but he can’t cancel the utilities just yet. Paragraph 7A (Access, Inspections and Utilities) of the TREC contract requires sellers to provide reasonable access to the property for inspections and to have utilities on for the duration of the contract period. If the property is vacant and the utilities are already off, the seller must have them turned back on.

This article originally appeared in the April 2016 issue of Texas REALTOR® magazine. Read current and past issues of the magazine at texasrealestate.com/magazine.

Categories: Legal
Tags: legal, contracts, texas realtor magazine


Comments

Rick DeVoss on 04/24/2016

We have a problem with no good solution, ...at least not that I have seen.

If the seller signs the contract, (without modifications), then the agreement says that the utilities will be left On until it closes.  Many times this seems to work during the first week when inspection(s) are being made.  ~But what can you do if the seller turns off the power after the option period??

What buyer do you know who will sue the seller for breach of contract?
[The agent can’t file the suit.]

Many times something comes up where the power and/or the water needs to be On before the file closes.  If you can’t force the seller to turn on the utilities, then maybe the buyer will agree to turn them On.  ...But be careful because there is a great liability to turning on utilities on a property that you don’t own.

The solution is to get the seller’s written permission to turn them on.  But that may be difficult if you are in the middle of a transaction, especially if things are not going smoothly.  So I would suggest that maybe we need to modify Para. 7 so that it allows the buyer to turn the utilities On if they should be Off for any reason.  It would be much easier to get the seller to sign that up front.

There is a trap here:  do not write this idea into Special Provisions, or you could be charged with practicing law.  Encourage your buyer to get assistance from an attorney.  (We are lucky to have one at our title company who will draft paragraphs for the client.)

I work with an energy company, so I know how easy it is to get the power On.  They will tell you it takes two business days, but we have had success in three hours.  It is my opinion that no buyer should accept a property unless he can inspect it with the utilities On!

Mike McEwen on 04/24/2016

Just because P. 7. says the seller has to turn/leave on the utilities, he does not have to.  If he crosses out the provision and buyer agrees to it, then it is OK.  Again, not a good idea, but both parties could agree to that contractual change.

Mike McEwen on 04/24/2016

There is no legal requirement for anybody to turn on the utilities.  It is strictly contractual.  It would not be appropriate for a seller to not agree to turn on the utilities but no law says he has to.

THERESA AKIN on 04/24/2016

When it comes to foreclosures usually (at least in our area) the listing agent will have a website or refer to our documents section in the MLS Listing for instructions and copies of the contract/offer to be submitted. I will print up a copy and explain to my buyer and go over the rules and regulations/instructions so they know the process if they have never done it in the past.  Every foreclosure company, financial entity or government (VA) is different. If the property isn’t occupied, the utilities are not going to run up that much. Here in Texas, keeping the A/C on is a plus factor against mold build up. Foreclosures with exception of a few can be expected to have no utilities working

Rick DeVoss on 04/22/2016

To Cy:  You asked if mechanical problems are valid reasons not to turn on utilities…

No!  ~They are valid reasons to alter Paragraph 7 of the contract.

Once the seller has countered that he is Not going to turn on utilities, and Disclosed what the problems are, then the buyer has the right to walk away.  Once a buyer knows the issues, then he can still buy it “as is”, and repair things before turning on utilities.

It may be in the interest of the seller to make the repairs, and then leave the utilities On.  This will bring a better price for the property, and cause it to sell much faster.

Cy Labat on 04/22/2016

Some foreclosures/vacant properties have been vandalized and the meter loop and wiring are gone.  In that case my seller may not turn them on.  Also, if there are concerns about the wiring inside the home that may cause further damage (fire, safety,  etc) then they may not turn them on. If there are serious plumbing issues they may not turn water on.  These issues are disclosed. It is real problem with our rural vacant properties.  Are these valid reason to not turn on the utilities?

Linda Osborn on 04/22/2016

There are some valud reasons WHY a seller SHOULD leave the utilities ON, contract or not, law or not. I’ve seen pipes freeze and crack if not properly drained in cold weather, causing havoc when water is turned back on. I’ve seen doors expand to where they won’t close and mold grow due to excess moisture / humidity when there is no AC. In addition, like many electromechanical things, HVAC systems can be damaged when they are not run. In all cases, fixing the results can be 10x more expensive and / damaging than leaving the utilities on in the first place. (Nevermind that a home just shows better that way! wink

Rick DeVoss on 04/21/2016

I may be out on a limb here, but nothing in the MLS remarks is binding on the buyer and the seller.  The only thing that matters is what is written in the contract that the parties signed. 

And if the seller’s addendum does not delete the requirement for utilities to be On according to Paragraph 7, then they still have the obligation to get them On and leave them On.  ....or, they could tell the Listing Agent to do it!

Lynn Weber on 04/21/2016

Standard 1-4 contract.  So far we have not won any of the bidding wars on them, but I’m sure a day will come that we do.  They put in the MLS that sellers will not turn them on, but there is nothing in any of the addenda that mentions it.

Rick DeVoss on 04/21/2016

(Lynn)  —There is a difference between “law” and “contract”.

There is No law that says a person has to leave the electricity On in a house.  But there IS an agreement in the contract (P. 7) that says the utilities have to be ON for the duration of the contract,—-NOT the duration of the inspection period!

(I saw one cheap seller who turned them Off after an inspection was completed, and then when we had a problem, could not get them turned back On.  ~Does this become the buyer’s responsibility??  > I thought it was the listing agent’s responsibility because she failed to advise her seller of her responsibilities under the terms of the contract.)  (She even argued with me about what was right.)

Foreclosures:  Whose contract are you using??  If it is one drawn up by a bank’s attorney, then the clause about keeping the utilities On may not be in there.  ...Did you Read the contract before you advised your buyer to sign it?

Lynn Weber on 04/21/2016

Then how do foreclosures get away with not turning them on even for inspections?

Chris Rosprim on 04/19/2016

Besides the requirement for the seller to see that all utilities are on to accommodate inspections - as we all know - things happen on the way to the closing table and sometimes closings don’t happen - then you have a vacant property with no utilities.  Makes it difficult to show and the insurance policy covering the property may be in jeopardy in the event of a loss as the insurance company may consider the house to be “abandoned” if there are no utilities on.

Rose Riggan on 04/19/2016

Houston, Tx it’s usually available for the buyers to have inspections completed. 
I always advise sellers to leave the utilities on until we close.
This saves sellers time and any possible deposits necessary if the utilities happen to be turned off then needed to be turned back on. 
Makes for smooth closing along with following Trec guidelines.  . Paragraph 7A (Access, Inspections and Utilities) of the TREC contract requires sellers to provide reasonable access to the property for inspections and to have utilities on for the duration of the contract period - See more at: https://www.texasrealestate.com/advice-for-texas-realtors/article/when-can-a-seller-turn-off-the-electricity#sthash.UZ3OJf8u.dpuf
Working Realtor, Rose Riggan

Candy Cargill on 04/19/2016

Here in small town rural Texas our electric coops will either set up a Landlord account for the owner so they don’t have to pay the minimum.  Out in the country, that takes care of the water, too as wells are run on electricity.  Or you can do it the easy way, leave it on and flip the breaker off…no chance in wasting anything there.  Just make sure you tell your friendly Texas REALTOR where the box is.

Mike McEwen on 04/19/2016

Unless the seller strikes that provision in the contract and the buyer agrees.


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The material provided here is for informational purposes only and is not intended and should not be considered as legal advice for your particular matter. You should contact your attorney to obtain advice with respect to any particular issue or problem. Applicability of the legal principles discussed in this material may differ substantially in individual situations.

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