Water, sewer, garbage and power all cost money, and a rental cottage uses all of them. Before the first lease, owners need a plan for who pays which bill and how. Good DADU utility billing starts with knowing how the utilities measure service to your cottage. Then it depends on the city rules that apply to charging tenants.

This guide explains the difference between separate meters and billing a tenant for shared service. It also covers disclosure, usage estimates and practical ways to split costs. Rules change, so check current city guidance before you set terms.

How Metering Shapes DADU Utility Billing

The simplest arrangement is a separate meter for each service. When a cottage has its own electric meter, the tenant can often hold the account directly. However, many cottages share a water meter with the main house, and some share electric service too.

Owners decide on metering during design and permitting, not after move in. So the choice affects both construction cost and how billing works later. Our post on DADU separate meters explains those tradeoffs in detail.

Who Can Hold Each Account

Seattle’s utilities treat accounts differently. According to the city’s Renting in Seattle utilities page, new tenants cannot open water, sewer or garbage accounts in their own names. The landlord is responsible for the overall account with Seattle Public Utilities.

Electricity is different. The same page says tenants can open a Seattle City Light account in their own name. As a result, a cottage with its own electric meter often lets the tenant pay power directly. Water, sewer and garbage usually stay with the owner.

Separate electric service can take planning, though. If a new electric meter needs more capacity, our post on a DADU electrical upgrade explains what that can involve.

Including Utilities in Rent

One common approach is to include some or all utilities in the rent. The owner pays the bills and sets a rent that covers expected costs. Seattle’s third party billing chapter states that including utility costs within rent is not a billing practice under that chapter.

This approach is simple for tenants and easy to explain. On the other hand, the owner carries the risk if usage rises. For that reason, many owners review past bills and leave a cushion when setting rent.

Billing Tenants Separately for DADU Utility Billing

Some owners prefer to charge tenants for their share of shared utilities. Seattle’s Third Party Billing Ordinance protects renters who pay a landlord or billing company for water, sewer, garbage or electric service. The city says it applies to residential buildings with three or more units.

A house with one cottage may or may not fall within that rule, depending on how the city counts the units. Because of that uncertainty, ask the city or a qualified adviser before you choose this method. Even where the ordinance does not apply, the lease should still state clearly how you split costs.

What a Clear Bill Includes

Where the ordinance applies, the city lists what a tenant’s utility bill must show. Required items include the name and contact details of the biller and the basis for each charge as a line item. The bill must also show the due date, any late charges and how to dispute a bill. For submetered units, the bill must also show current and previous readings and the amount used.

Even outside the ordinance, these items make a good model. In addition, the city notes that a tenant should receive a copy of the actual bill when a landlord charges directly. That kind of transparency reduces disputes and builds trust over the length of a lease.

Disclosure in Listings and Leases

Tenants want to know total monthly costs before they apply. So list which utilities you include and which the tenant pays. Also, the City Council passed the Rental Fee Restriction Ordinance, Council Bill 121254, on August 11, 2026, with an effective date of July 1, 2027. According to the city’s Renting in Seattle site, listings will need to disclose rent, fees and utilities.

Meanwhile, put the billing method in the lease in plain words. Describe how you divide shared costs, how often you bill and how tenants can ask questions. Clear terms at the start prevent confusion later.

Estimating Usage Before You Rent

Without a history of bills, owners must estimate. Start with the size of the cottage, its heating system, its appliances and the number of likely occupants. Then compare those details with the main house bills to build a rough picture. After the first few months, review actual bills and adjust your estimate if needed.

Efficient equipment helps keep costs predictable. A heat pump, good insulation and water saving fixtures can reduce the bills either party pays. Our guide to DADU utility expenses covers the construction side of these services.

Choosing a Practical DADU Utility Billing Approach

There is no single right method. Separate meters keep things simple but cost more to build. Including utilities in rent is easy but shifts risk to the owner. Splitting shared bills can be fair, yet it needs careful disclosure and may fall under city rules.

The best DADU utility billing plan is one you can explain in a sentence and apply the same way every month. Before you sign a lease, review the city’s current guidance and consider advice from a qualified professional. With that groundwork, both you and your tenant will know what to expect.