Property Managers: Adequate Notice Ruling from Supreme Court

Managing property is not limited to finding tenants and collecting rent. One critical component of any property manger’s duties is to safeguard their client’s property. Thus, daily tasks like keeping up the landscaping and making repairs are necessary to keep the property in habitable condition and protect the landlord’s investment. Another responsibility is making sure all vendors are paid, utilities are current, and the mortgage and taxes are paid timely. If a utility is disconnected without the manager’s knowledge, the property can be extensively damaged. I know, you’re not concerned because notices about disconnection must be mailed, right? Not so fast.

Property managers take note, the Ohio Supreme Court ruled that a public utility can provide notice of the disconnection of utilities by hanging a tag on the property’s front door. Specifically, the Court held that the door tag constituted adequate notice of disconnection under Ohio law.

The case stems from a dispute between Columbia Gas and an architectural design firm that vacated the property at issue. Although the property was vacant it continued to be maintained. Unbeknownst to the design firm, service to the property had been disconnected after a cable company hit a gas line near the property. A Columbia Gas technician repaired the line, but left the meter valve off and locked so no gas would go into the property. The technician observed a Columbia Gas tag on the front door. Several months later the technician was called back to the property a second time to repair the gas line again. This time the technician observed the original tag on the front door and placed a second tag on the front door, about reestablishing service.

As a result of freezing temperatures, the water pipes in the building froze and caused damage to the building. The design firm maintained that it did not know that service to the property had been disconnected and sought compensation from Columbia Gas for the damage. The design firm relied on a statutory requirement that Columbia Gas furnish necessary and adequate notice regarding its services. Columbia Gas cited its internal standards, which required its technician to leave a tag on the door when the gas is shut off and no one answers the door.

The Public Utilities Commission of Ohio (PUCO) decided and Columbia Gas’ favor and the case was appealed to the Ohio Supreme Court. The Court found nothing unlawful or unreasonable about PUCO’s decision that the door tag notice was adequate. Although, as the design firm argued, Columbia Gas may have provided “better” notice, the Court ruled that the only issue was whether the notice Columbia Gas did provide was adequate. Thus, the two tags on the front door of the building were adequate notice that the gas had been disconnected.

Although the case factually did not deal with a property manager, the holding is important to every property manager’s practice. Property managers should not rely on utilities to mail notices concerning disconnected utilities. If a property under the manger’s care is vacant, the manager’s business practices should include monthly visits to the property and retrieval of any notices on the front door of any building. Under this decision, if your management company failed to retrieve the notice on the front door, you’d likely be responsible to pay for all of the damage due to the disconnected utility. Check out some of the worst mistakes a property manager can make