Things You Need to Know About RUBS (Ratio Utility Billing System): State Regulations & Implementation

Navigating the functionalities of the Ratio Utility Billing System (RUBS) across different states can be challenging for property managers and owners of multifamily properties. Each state has its own set of rules, which can significantly affect how utility costs are divided among tenants. Understanding these variations is crucial for ensuring legal compliance and optimizing cost recovery.

RUBS comes with many benefits, but property managers are often concerned about the legal aspects of applying RUBS to their properties. Local state and municipal regulations can vary from strict prohibition to few restrictions.

What is RUBS in Real Estate

The Ratio Utility Billing System (RUBS) is a utility billing formula for multifamily real estate. RUBS enables owners and managers to reasonably allocate utility costs to tenants without relying on submeters. 

RUBS is a formula-based system that uses criteria like the number of occupants, square footage, or the number of bedrooms or bathrooms to allocate utility expenses.

A typical RUBS formula looks like this:
(Unit Factor ÷ Total Property Factor) × Total Utility Bill = Tenant Charge

Here, the “unit factor” could be the number of occupants, square feet, or plumbing fixtures, depending on the property’s policy.

This RUBS utility billing system offers a flexible, cost-effective way to implement tenant billing while improving operational efficiency. For many landlords, RUBS helps recover utility costs, increase NOI, and simplify multifamily utility billing, all without violating local laws, as long as the ratio utility billing system is legal in their state.

When you’re billing, you have a lot of freedom in deciding which regions to combine. For instance, if you operate a commercial building, one renter might occupy the whole level, or two tenants might share the same floor. Whatever the situation, you can modify your billing formula to account for it. You may ensure each tenant pays a proportionate share of the total bill.

How Does the RUBS Process Work?

When calculating utility bills, RUBS considers each flat unit’s attributes. For instance, the RUBS billing method system will assess a higher fee for a unit with two residents than for a unit with just one.  In the same way, if a unit has a washer or a dishwasher, the RUBS utility billing system algorithm will take this equipment into account. That unit will be charged extra under the calculation for water or electricity use.

With the RUBS system, common elements that affect a unit’s bill include:

• How many people reside there?
• Quantity of bathrooms and bedrooms
• How many fixtures do you have with water?
• The number of appliances
• Square feet

When you’re billing, you have a lot of freedom in deciding which regions to combine. For instance, if you operate a commercial real estate building, one renter might occupy the whole level, or two tenants might share the same floor. Whatever the situation, you can modify your billing formula to account for it. You may ensure each tenant pays a proportionate share of the total bill.

Key Benefits of Using RUBS for Utility Billing

The Ratio Utility Billing System (RUBS) offers a solution for property management to distribute utility costs among tenants fairly. This RUBS billing system is commonly used in multifamily real estate to streamline tenant utility billing using a formula-based approach.

Here, we explore the numerous benefits of RUBS, highlighting its impact on cost savings and maintenance practices in multifamily tenant billing:.

• Reduces management costs by eliminating the need for meter installations.
• Enables precise recovery of utility costs from tenants.
• Lowers tenants’ monthly bills, leading to utility savings.
• Decreases overall operating costs for property owners.
• Promotes reporting of maintenance issues by tenants, such as leaks.
• Facilitates utility cost recovery in areas where meter installation is impractical or unaffordable.
• Allows landlords to remain competitive in the market without raising rent.

In today’s competitive real estate and rental markets, the RUBS program enables landlords to manage expenses more transparently while offering predictable billing to tenants. By implementing the RUBS billing method, property owners can maintain profitability and tenant satisfaction across diverse property types and regional regulations.

State-by-State Regulations for RUBS Utility Billing System

There is no general legal advice regarding RUBS across states and municipalities, and it’s best to consult a specific state’s applicable laws and regulations. That said, we outline here some of the multifamily RUBS regulations in different states:

RUBS Utilities regulations in Washington 

According to Washington state regulations, RUBS billing is allowed in the state, but administrative fees are either not allowed or restricted, depending on the city or municipality concerned. Seattle, for example, has extensive regulations, which can be found here. These include requiring the public posting of recent bills and providing at least 90 days’ notice to the tenants. The state has a blanket restriction ensuring tenants are not billed more than a property’s utility bills.

Learn more here: https://library.municode.com/wa/seattle/codes/municipal_code?nodeId=TIT7COPR_CH7.25THPABIRE

RUBS Utilities regulations in Tennessee

At the state level, Tennessee generally allows Ratio Utility Billing System billing. The state is both submetering and individualized utility billing friendly. However, staying up-to-date with the latest regulations, particularly at the municipal level, is advisable as rules often change. As an example, submetering in Memphis is difficult. In Tennessee, reasonable administrative costs shall not exceed $4.00 per individual dwelling unit per month.

Learn more here: https://www.tn.gov/environment/permit-permits/water-permits.html

RUBS Utilities regulations in North Carolina

North Carolina laws regarding RUBS are strict. According to state laws, the Ratio Utility Billing System cannot be used in North Carolina. Thus, submetering is a must if a landlord wants to recover the cost of water and wastewater usage from tenants. 

More relevant info for North Carolina is available here: https://www.ncuc.net/ncrules/Chapter18.pdf

Explore how North Carolina’s ban on RUBS opens the door to innovative billing practices. Learn about effective alternatives that keep your community compliant and satisfied—read the full article here!

RUBS Utilities regulations in Nevada

In Nevada, multifamily property owners can use the Ratio Utility Billing System (RUBS) for water charges. The lack of restrictive laws enables property managers to implement RUBS without legal hurdles, facilitating straightforward utility billing that aligns with usage across different tenants. However, Nevada has strict Ratio Utility Billing System guidelines for mobile home parks, which can be found below. One limitation of mobile home parks is the prohibition of charging tenants for common area usage.

RUBS Utilities regulations in Arizona

In Arizona, the Ratio Utility Billing System utility billing is completely legal. Along with other utilities, trash and sewer billing can also be included in RUBS and administrative costs. A company involved in billing services or submetering in Arizona may be able to provide further clarity. In Arizona, the applicability of RUBS extends beyond water to include other utilities. This flexibility allows property managers to tailor the billing to cover all significant utilities, making it a versatile option for diverse property types.

The requirements of the Arizona Landlord Tenant Act can be found at  https://housing.az.gov/sites/default/files/documents/files/Landlord-Tenant-Act-ADOH-Publication-July-2018_0.pdf

RUBS Utilities regulations in Oregon

In Oregon, a Ratio Utility Billing System is permitted. However, charging any administrative fee is strictly not allowed. The tenants have the right to ask for and inspect master utility bills. Landlords must either provide the bills automatically or make them available upon request. If landlords don’t comply with certain state regulations, tenants can recover one month of rent. 

Regulations in Oregon can be found at https://oregon.public.law/statutes/ors_90.315

RUBS Utilities regulations in New Mexico

It is legal to bill tenants of multifamily properties for individualized utility usage. In Ratio Utility Billing System billing, sewer, and trash billing can also be included. However, there are some regulatory restrictions. Landlords must provide a copy of the bill and the RUBS calculations if tenants request so, but can charge the tenant up to $5 each month such requests are made. 

Relevant New Mexico regulations can be found here https://law.justia.com/codes/new-mexico/2021/chapter-47/article-8/section-47-8-20/

RUBS Utilities regulations in Utah

Ratio Utility Billing System is allowed as per the laws of Utah for water, wastewater, and trash services, but submetering of electricity is prohibited in many instances. However, the metering of electricity per apartment by an electric utility is not considered submetering and is allowed and often mandated. The Utah Division of Public Utilities ensures utility customers get safe and reliable services.

Learn more here: https://multifamilyutility.com/state-directory/utah/

RUBS Utilities Regulations in California

In California, the Ratio Utility Billing System is generally permitted, but implementation is subject to city-level restrictions and rent control laws. In some cities, RUBS fees are considered part of the rent, which may affect how much landlords can charge. Local jurisdictions such as West Hollywood and San Jose have banned RUBS entirely. Property owners must ensure that any RUBS charges reflect actual usage and are disclosed clearly in lease agreements.

Learn more here: California Public Utilities Commission—Final Decision on RUBS Allocation Practices

How to Implement the RUBS Program for Tenants

Rolling out a RUBS program to tenants involves more than just calculating utility shares, it requires clear planning, compliance, and tenant communication. 

Here’s how to implement RUBS effectively while ensuring transparency and satisfaction:

1. Understand Local Regulations: Before starting a RUBS program to tenants, check if the Ratio Utility Billing System is permitted in your state or city. Legal requirements vary widely and may include limits on administrative fees, notice periods, or disclosure obligations.
2. Choose a Fair Allocation Method: The core of the RUBS billing method is a formula that distributes utility costs based on logical, fair criteria, such as occupancy, square footage, or number of bathrooms. 
3. Notify Tenants in Advance:  Provide clear, written notice about the new RUBS utility billing system, ideally 30 to 90 days before the first charge. 
4. Update Lease Agreements or Addendums:  Include RUBS details in lease renewals or add a utility billing addendum. This formalizes the process and helps prevent confusion or disputes.
5. Configure Your Billing System: Use a reliable platform or billing software to track master utility bills, apply the RUBS formula, and generate itemized charges per tenant. Accuracy builds trust.
6. Provide Ongoing Support: After launching your RUBS program, make it easy for tenants to ask questions or raise concerns. Share FAQs, provide examples, and ensure your team can walk tenants through their bills if needed.

RUBS Utilities: The Drawbacks You Can’t Ignore

While the Ratio Utility Billing System can seem like a quick fix for distributing costs, its limitations often outweigh the advantages:

• Unfair perception among tenants – Charges are formula-based, not measured, which often leads tenants to feel they’re overpaying compared to actual usage.
• Regulatory hurdles – Laws differ by state and city; some places ban RUBS entirely, while others impose strict limits and disclosure requirements.
• Tenant dissatisfaction – Lack of clarity around formulas can create mistrust, resistance to new lease terms, and frequent disputes.
• Operational challenges – Implementing RUBS requires significant effort in lease updates, tenant education, and handling billing complaints.
• Collection difficulties – Non-paying tenants cannot have utilities disconnected under RUBS, leaving eviction as the only option.

Why Choose Dune Submeters over RUBS?

Dune’s water submeters are easy to install (clamp-on) without plumbing hassles and measure each apartment’s water usage. Property owners can charge tenants for their own monthly use and offload water and wastewater expenses to the tenants fairly.

Additionally, Dune submeters provide a direct measurement of water usage, which promotes conservation and helps tenants manage their utility expenses more effectively. This method ensures fairness in billing and supports environmental sustainability by encouraging responsible water use.

Are you a property owner using or considering RUBS today? Our calculator can help you check out how much your NOI could increase using Dune’s water submetering solution.

FAQS

What is the Ratio Utility Billing System (RUBS)?

RUBS allocates utility costs to tenants based on factors like unit size and occupancy without individual meters, simplifying billing for multifamily properties.

Why are Dune Submeters considered a better alternative to RUBS?

Dune Submeters offer precise water usage measurement per apartment, promoting fair billing and water conservation, unlike RUBS which estimates based on allocations.

Is RUBS legal in California?

Yes, RUBS is permitted in California, but it comes with specific regulatory requirements. Property owners must follow rules around meter approval and the licensing of installers, which can make implementing utility billing systems more complex.

Can Dune Submeters be installed in any multifamily property?

Yes, Dune’s submeters are designed for easy installation without plumbing modifications, making them suitable for any multifamily property.

What are the legal considerations for using RUBS in multifamily properties?

Legal considerations for RUBS vary by state; it’s crucial to consult local laws to ensure compliance with specific regulations regarding utility billing systems.