Most Arizona landlords never need this page. If the gas and electricity are in your tenant’s own name, the utility company bills them directly and none of what follows applies to you. If you include utilities in the rent and charge a single figure, that is not a utility charge at all. It is rent.
The rules below start when you do the billing yourself: one meter serving several units, one bill arriving in your name, and a share of it passed on to each tenant.
This page is written for the landlord. If you are the tenant, the guide for tenants covers the same ground from your side.
The Two Ways to Split a Utility Bill
Five utilities may be charged separately: gas, water, wastewater, solid waste removal and electricity. Arizona permits two ways of doing it.
Submetering means each unit has a meter of its own behind the main one. You read it, and the tenant pays for what that unit actually used.
A ratio utility billing system, usually shortened to RUBS, is for buildings without those meters. One bill arrives for the whole property, and you divide it among the units by a formula — by square footage, say, or by how many people live in each unit.
With submetering the charge is measured. With a ratio system it is calculated, which is why Arizona requires the method of calculation to be written into the rental agreement.
| What Arizona requires | Submetering | Ratio billing (RUBS) |
|---|---|---|
| A meter for each unit | Yes | No |
| What the tenant pays for | The unit’s measured use | A share worked out by formula |
| Separately charged utilities, and the amount of any administrative fee, disclosed in the agreement | Required | Required |
| A specific description of the allocation method in the agreement | Not required | Required |
| Administrative fee, limited to actual administrative costs | Permitted | Permitted |
| Each bill shows the period’s charges, meter readings and reading dates | Required | Required |
| Notice before starting with an existing tenant | At least 90 days | At least 90 days |
Which Charges These Rules Cover
The section names five utilities and no others. Internet, cable and services such as pest control are not mentioned anywhere in it.
So the rules on this page — the actual-cost limit, the disclosure, the bill format — apply to those five and to nothing else. What governs a separately billed internet or cable charge is the rental agreement and the general law of leases, not this section.
One question the section leaves open. It says a landlord charging for one of the five may not impose any additional charges. It does not say whether that reaches other services billed alongside. If your statement carries more than the five named utilities, and the answer matters to you, put it to a lawyer rather than guess.
You May Recover What It Cost You, and Nothing More
You can pass on the charges the utility provider imposed on you, and you can add an administrative fee. Arizona does not permit anything beyond those two.
The fee is limited to actual administrative costs only. The section does not go on to say what counts as one, so there is no list to work from and no permitted maximum to aim at. What the wording does make clear is the shape of the thing: the fee recovers a cost you actually carry, which means you need to know what that cost is.
This is worth taking seriously, because a utility line is the easiest item on a rent statement to inflate without ever deciding to. Round the water bill up to a convenient number. Keep charging a monthly fee that matched the work three years ago. Neither feels like overcharging while you are doing it.
What the Lease Has to Say
Two things, on every arrangement of this kind:
- a list of the utility services you are charging separately; and
- the amount of the administrative fee, if you charge one.
If you are using a ratio system rather than submeters, the agreement also has to carry a specific description of the method you use to divide the costs. The word “specific” matters there. “Utilities billed separately” describes no method at all. “Water and wastewater are divided among the units in proportion to livable square footage” does.
The Ways You May Divide a Shared Bill
Where there are no submeters, Arizona lists the methods you are allowed to use. You may use more than one — water by the number of fixtures and electricity per tenant, for instance.
- Per tenant.
- Proportionately by livable square footage.
- Per type of unit.
- Per number of water fixtures.
- For water and wastewater, by an individually submetered hot water measure for the unit.
- Any other method that fairly allocates the charges and is described in the tenant’s rental agreement.
Two of those terms are left undefined. The section does not say what makes units different “types”, and it does not say who decides whether a method allocates charges “fairly” or against what standard. If a tenant challenged an allocation, a justice court would be the one answering the question.
That is an argument for choosing a method you can describe exactly and show your working on, and for keeping the description in the agreement close to the words the statute uses.
Starting It Partway Through a Tenancy
You can, and two conditions both apply.
The rental agreement has to provide for it. If the agreement your tenant signed says nothing about submetering or a ratio system, you cannot introduce one during the term.
And an existing tenant is owed at least ninety days’ notice before the billing begins. That applies to either system: the statute names submetering and ratio allocation side by side in the same sentence.
What Every Bill Must Show
Every bill has to carry three things. The cost of the charges for that period, stated separately. The opening and closing meter readings, together with the dates they were taken. And the amount of any administrative fee.
A line on a rent statement reading only “utilities” does not meet this, however accurate the number happens to be.
There is an unresolved question here for ratio billing. The requirement is written to cover an “allocation or submetering system” in the same breath, and it asks for meter readings — but under a ratio system no meter serves the individual unit. The section does not say whose readings a ratio bill should carry. If you bill by a ratio method, that is worth a lawyer’s view rather than a guess from a general page.
If You Are Not Following the Billing Rules
Arizona gives the tenant a route, and it is aimed at a specific failure: a landlord who is not complying with the recovery and disclosure rules. Charging more than the utility cost plus actual administration, or leaving the required disclosure out of the lease.
The tenant has to object to the landlord in writing first. That step comes before anything else. If the objection does not settle the matter, the tenant may then file a civil complaint in the justice court to enforce the section. Our justice courts by county pages list every one in Arizona, with addresses.
An ordinary mistake is a different thing. A misread meter or an arithmetic error is not a failure to comply with the section, and the statute sets out no procedure for it. In practice that is a correction on the next statement.
If a Tenant Pays the Rent but Not the Utility Share
This is the question landlords ask that Arizona does not clearly answer, and it is worth knowing that it is unsettled rather than assuming either way.
Unpaid rent carries a five-day written notice. A breach of the rental agreement that is not about rent carries ten days to put right. Which one an unpaid utility share falls under is not stated anywhere in the utility billing section. The Act defines rent broadly, as payments made to the landlord in full consideration for the rented premises, which leaves room for argument in both directions depending on how the agreement treats the charge.
So this is one to put to a lawyer before serving a notice, rather than after. Serving the wrong notice costs you the time it takes to start again. The notice periods themselves are set out in full elsewhere on this site.
Submetering Does Not Turn You Into a Water Company
Arizona also provides that submetering, or using a ratio system, does not by itself make an apartment community a public water system subject to regulation by the Department of Environmental Quality.
A Practical Checklist
None of these replaces the detail above, and the qualifications there still apply.
- Decide which of the five utilities you will bill separately.
- Decide whether the billing will use submeters or a ratio method.
- For a ratio method, settle the allocation method and describe it specifically in the agreement.
- List the separately charged utilities in the agreement.
- If you will charge an administrative fee, state the amount in the agreement and keep a record of the costs it recovers.
- Set up a bill format carrying the period’s charges, the meter readings, the reading dates and the fee.
- Starting with an existing tenant: check the agreement provides for it, then give at least ninety days’ notice before billing begins.
Related Information
The repealed residential rental tax, and the rest of what a landlord may and may not charge, are on rent, fees and other charges. What the agreement itself has to contain is on what a lease must say.
Where These Rules Come From
Arizona’s laws are collected in a set called the Arizona Revised Statutes, usually shortened to A.R.S. The number that follows points to one section of it.
You do not need these numbers to use this page. They are here so that you, or a lawyer you hire, can check the exact wording. Each one links to the official text on the Arizona Legislature’s website, which opens in a new tab.
Almost everything above comes from one section, so what follows is a guide to its parts.
- A.R.S. 33-1314.01 is the utility billing law. Subsection A permits the two systems and names the five utilities. B is the money: provider charges plus an administrative fee for actual administrative costs only, no additional charges, and the disclosure the agreement must carry. C allows a system to be introduced during a term where the agreement provides for it. D is the tenant’s route where the landlord is not complying with B — written objection first, then a civil complaint in justice court. E is the bill format, including the readings and their dates, and it is written to cover both systems. F lists the six allocation methods. G has two separate rules in it: a ratio method must be described specifically in the agreement, and the ninety days’ notice, which the sentence applies to submetering and ratio allocation alike. H is the Department of Environmental Quality point.
- A.R.S. 33-1310 is the definitions section. Paragraph 12 is the broad definition of rent that leaves the unpaid-utility-share question open.
- A.R.S. 33-1368 carries the two notice periods that question sits between: subsection A is ten days for a breach of the agreement, and B is five days for unpaid rent.
Common Questions
Can an Arizona landlord charge tenants separately for water?
Yes. Water, wastewater, gas, electricity and solid waste removal may all be charged separately, either by submetering each unit or by dividing one bill among the units with a ratio utility billing system.
Can a landlord make a profit on utility billing?
No. You may recover what the utility provider charged you, plus an administrative fee limited to actual administrative costs. Arizona does not permit anything beyond those two. The section does not define what counts as an actual administrative cost, so there is no list to work from and no permitted maximum.
What must the lease say about utility billing?
It has to list the utilities being charged separately and state the amount of any administrative fee. If you divide a shared bill by a ratio system rather than reading submeters, the agreement also needs a specific description of the method you use.
How may a landlord divide a shared utility bill?
Per tenant, proportionately by livable square footage, per type of unit, per number of water fixtures, or for water and wastewater by a submetered hot water measure. There is also a general option: any other method that fairly allocates the charges and is described in the tenant's agreement. More than one method may be used, and the section leaves both “type” and “fairly” undefined.
How much notice do I have to give an existing tenant?
At least ninety days before the billing begins. The statute applies that to submetering and ratio allocation alike. You also need the rental agreement to provide for it; a system cannot be introduced during a term the agreement said nothing about.
Does this cover internet or cable?
No. The section names gas, water, wastewater, solid waste removal and electricity, and no others. A separately billed internet or cable charge is governed by the rental agreement and the general law rather than by these rules. Whether the section's ban on additional charges reaches other services billed alongside is not something it answers.
What has to appear on the utility bill itself?
The cost of the charges for that billing period stated separately, the opening and closing meter readings with the dates they were taken, and the amount of any administrative fee. A rent statement showing one line marked utilities does not meet this.
What can a tenant do about incorrect utility billing?
Object to the landlord in writing first, which the statute treats as the required first step. If that does not settle it, the tenant may file a civil complaint in the justice court to enforce the section. That route is aimed at a landlord charging more than the law allows or leaving the disclosure out of the lease, rather than at an ordinary arithmetic mistake.