You would think this is pretty straight forward. However, whether you are buying or selling a home, when it comes time to prepare for closing, you need to really be on top of switching your utilities. Part I is pretty basic - remembering to switch over your gas, electric, water, cable, internet, and phone service or you may find yourself paying someone else's utility bills in your old home and find yourself without utilities in your new home.
But it's Part II that is tricky and could actually stop a closing dead in it's tracks - believe it or not - and I have first hand knowledge of this topic. When exactly do you schedule the switchover?
Basically you are trying to avoid an interruption of service in gas, electricity, or water - especially in the dead of winter. Your heating system will need both gas and electricity in order to operate. Lose heat during a super cold spell and your water pipes could freeze and then break, which would result in catastrophic damage to the home. I've seen short sales and foreclosures where this has happened and the damage can be horrendous.
So if you are the seller DO NOT switch off your service on the morning of closing unless you know for an absolute fact that the buyer is switching it on at the same time. It is best to switch it off the next day. But why should the seller pay the utilities while the buyer owns the home? Two reasons:
- You can't be absolutely certain that you are really going to close and you may end up still owning your old place at the end of the day. Stuff happens and closings get delayed - or even cancelled. If that happens you want to be sure you still have heat - gas and electricity.
- The buyer may forget to have the utilities switched to their name on closing day and then the utilities may get turned off. But isn't that the buyer's problem? No, it's the seller's problem because technically the seller owns the home until closing and if the buyer shows up for a final walk-through and the heat is not working and they can't verify the functioning of various appliances and it's going to be 5 days before the heat is back on (see below) then guess what? They can cancel the closing because the seller failed to maintain the home in the proper condition.
If you are the buyer you really don't want any problems on closing day so just be sure to switch the utilities over to your name on the morning of closing. Yeah, I sort of just told both of you to cover closing day, which technically can't happen. What I'm saying is that both of you need to be on top of this and your message to the utility company is that there should be absolutely no interruption of service on closing day no matter what.
People's Gas Really, Really Sucks...Really
If you think that I'm trying to scare you I am. Once People's Gas turns off the gas you are totally screwed. It will be 5 days before they will come back and turn it on - even though it's a 5 minute project. The video below sums up their attitude even in the dead of winter. It's just not critical in their opinion unless your house is about to explode.
And you thought this was trivial.
Gary Lucido is the President of Lucid Realty, the Chicago area's full service discount real estate brokerage. If you want to keep up to date on the Chicago real estate market, get an insider's view of the seamy underbelly of the real estate industry, or you just think he's the next Kurt Vonnegut you can Subscribe to Getting Real by Email. Please be sure to verify your email address when you receive the verification notice.
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