In Practice
When the owner pays the utility company and residents repay part of the cost, that repayment is utility reimbursement. It appears as income on the operating statement, often next to the matching utility expense. Methods vary: submeters measure each unit's use, RUBS divides the building bill by formula, and a flat fee charges the same amount to everyone.
The manager's role is making sure it is done fairly and clearly. The lease or an addendum must explain what is billed and how, bills should post on time, and your team should be ready to explain a charge that looks off. Reimbursement also affects pricing: residents compare total monthly cost, not just rent, so what you bill back shapes how competitive your rent really is.
An example: if a community pays 8,000 dollars a month for water, sewer and trash and recovers 6,000 dollars from residents, the net cost to the property is 2,000 dollars. Numbers here are just an illustration.
A common mistake is billing without proper disclosure or at rates the law does not allow. Rules on utility billing, caps, fees and required lease language vary by state and city, and some subsidized housing programs have their own rules, so check local law and program requirements. Another is booking reimbursements as a reduction of the utility expense when your owner expects them shown as income.
Not to Be Confused With
Utility reimbursement is the income. RUBS is one way of working out how much each resident pays.
Utility Reimbursement: Common Questions
What is the difference between utility reimbursement and RUBS?
RUBS is one method of splitting a utility bill. Utility reimbursement is the money that comes back to the property, whichever method sets the amount.
Can all apartments bill residents for utilities?
No. Rules vary by state, city and housing program, and the lease must disclose the charge. Check local law and program rules first.
