Water and Sewer Billing Rules for Mobile Home Park Owners: What You Can Legally Charge Residents
If you are counting water reimbursement in a park's net operating income, first separate the utility bill from the fee a state allows you to add. This guide shows the California and Texas limits, a $3,000 monthly-bill example, the federal threshold for an owner-operated well, and the records to request before you credit the revenue.
This is general information, not legal advice. Utility, landlord-tenant, drinking-water, and local rules vary by state and can change. Review the current law, your lease and utility tariff, and speak with a qualified attorney or regulator before billing residents or underwriting utility revenue.
Can a park profit on submetered water?
Do not assume a utility markup is income. In California, Civil Code section 798.40 (California, current code checked September 29, 2026) permits the charges and fee described in that section; it does not give management an open-ended right to mark up water. In Texas, Water Code section 13.503 (Texas, statutes current through 2025) allows a community owner to bill through submeters, but the applicable retail utility rate is passed through rather than marked up.
The exact answer also depends on the lease, local rule, serving utility tariff, the charge being billed, and the allocation method. Keep utility reimbursement separate from base rent when you underwrite it. For the other regulated revenue line, see lot rent increase notice laws by state.
California: apply the rule to each homeowner bill
Under Civil Code section 798.40 (California, current code checked September 29, 2026), "water service" includes charges related to water, sewer, stormwater and flood control. A submetered homeowner's volumetric water charge cannot include water used by common-area facilities or by anyone other than that homeowner. The statute specifies ways to allocate volumetric and fixed service charges.
The combined management or billing-agent billing, administrative, or other fee is the lesser of:
- $4.75 for the homeowner's bill, subject to the statute's permitted CPI increase; or
- 25% of the homeowner's volumetric-use charge.
Starting January 1, 2022, the statute permits management to increase the $4.75 maximum annually by no more than the specified California fiscal-year-average CPI increase. Section 798.40 does not publish one universal 2026 adjusted amount, so the example below treats each of the 60 billed spaces as one homeowner bill and uses its $4.75 base figure. An owner using more must support the applicable calculation. The same section requires management to post the serving utility's current residential rate schedule, or its web address; if management posts the address, it must provide the schedule free on request and tell homeowners they may request it.
The $3,000 worked example below is deliberately limited to water. Before billing sewer, stormwater or flood-control charges, apply section 798.40's definitions and the actual bill, lease, allocation and any local rule to the charge at issue.
Texas: pass through the rate, then cap the service charge
Texas permits submetered water billing in a manufactured-home rental community. It also permits wastewater billing when it is based on the resident's water consumption (Water Code section 13.503, Texas, current through 2025). Under the current PUCT rule 16 TAC section 24.281 (Texas, checked September 29, 2026), the submetering service charge may be no more than 9% of the tenant's submetered water and wastewater charge.
That is a service-charge cap, not a general right to add markup. Texas rules address applicable taxes, surcharges and retail-utility customer-service charges separately. The PUCT rule says the retail customer-service charge must be divided among all dwelling units capable of service through the master meter, including vacant units. An owner intending to begin submetering or change a billing method must register with the commission under 16 TAC section 24.277 (Texas, checked September 29, 2026).
Example only: a 60-space park with a $3,000 monthly water bill
This is a made-up example, not a real park or a forecast. All 60 spaces are billed, and each homeowner has a $50 volumetric-use charge, for $3,000 in total. The $3,000 is entirely water volumetric cost allocated to residents, with no common-area water in the resident charge. It includes no taxes, surcharges, fixed utility-service charge, wastewater charge, or CPI adjustment. Those items change the calculation and must be supported by the applicable rule and actual utility bill.
| Item | California calculation | Texas calculation |
|---|---|---|
| Resident water usage charges assumed in the example | $50 per homeowner x 60 homeowners = $3,000 | $3,000 |
| First fee limit | $4.75 per homeowner x 60 homeowners = $285 | 9% x $3,000 = $270 |
| Second fee limit | 25% x $50 per homeowner x 60 homeowners = $750 | Not applicable |
| Maximum additional fee under the stated assumptions | Lesser of $4.75 and $12.50 per homeowner = $4.75; $4.75 x 60 = $285 | $270 |
| Total resident water charges under the stated assumptions | $3,285 | $3,270 |
The California calculation applies the two limits separately to each homeowner's bill under Civil Code section 798.40 (California, current code checked September 29, 2026). For each $50 bill, 25% is $12.50, so the $4.75 base figure is lower. Its $285 result uses that base figure, not an assumed 2026 CPI adjustment. The Texas result applies the 9% cap in 16 TAC section 24.281 (Texas, checked September 29, 2026).
Texas may permit taxes, surcharges and certain retail utility charges in addition to these illustrative figures, but that does not turn the 9% cap into a general markup right. Neither result is unrestricted utility income. The lawful amount depends on the precise bill, allocation, occupancy or capable-of-service count, meter readings, local law, lease and state-specific rule.
For NOI underwriting, show utility billing separately from base rent. Ask for the seller's master bills, resident bills, allocation worksheets and meter records before accepting a claimed reimbursement figure.
When a park well becomes a public water system
A park-owned well can be a federally defined public water system if it provides water for human consumption and has at least 15 service connections, or regularly serves an average of at least 25 people daily for at least 60 days a year. The 60 days do not need to be consecutive (EPA Safe Drinking Water Act background and 40 CFR section 141.2, United States, checked September 29, 2026).
That federal threshold is a floor, not a safe harbor. A qualifying system has drinking-water compliance obligations, and state primacy agencies and local health or environmental agencies can add requirements. A park below the federal threshold may still be subject to state or local requirements.
Records and bill details to keep
Keep a file that lets a resident, buyer or regulator trace each bill back to the source.
- California bill details. Section 798.40 requires a periodic bill to separately state charges for the period and the homeowner's opening and closing meter readings (Civil Code section 798.40, California, current code checked September 29, 2026). Keep the utility rate schedule and the calculations behind those disclosures. This is a practical recordkeeping step; the cited section does not establish a general California retention period here.
- Texas submeter records. A Texas owner must maintain submetering records and make them available for tenant inspection during reasonable business hours; meter accuracy, testing and recordkeeping standards also apply (Water Code section 13.503, Texas, current through 2025). Keep master bills, tenant bills, reading dates, meter readings, allocation worksheets, customer-service-charge allocations and meter-test records.
- Federal public-water-system records. A public water system subject to 40 CFR Part 141 must keep required records on site or at a convenient nearby location. General federal periods include five years for microbiological and turbidity analyses, 10 years for chemical analyses, 10 years after completion of sanitary surveys, and three years after public notices are issued (40 CFR section 141.33, United States, current through September 25, 2026). Rule-specific requirements can add to these periods.
Buyer checklist before you credit utility revenue to NOI
Before you accept a seller's utility-reimbursement number, request:
- Master utility bills and resident bills for the same periods.
- Submeter readings, read dates, allocation worksheets and the count of spaces billed or capable of service.
- The lease language, local rules and the serving utility's tariff or rate schedule.
- The PUCT registration and billing-method records if the park is in Texas.
- Well permits, testing, compliance records and the connection or population count if the park owns its water system.
This fits into the wider inspection of how to evaluate a mobile home park, including what lot rent includes and whether utilities are separately billed. Verify the billing rule before you count a fee as income.
Before changing the billing method
Read the current statute and regulation for the park's state, then compare the lease, utility tariff and local requirements. Get advice before changing resident billing or relying on projected reimbursement in a purchase price.
This is general information, not legal advice. Utility, landlord-tenant, drinking-water, and local rules vary by state and can change. Review the current law, your lease and utility tariff, and speak with a qualified attorney or regulator before billing residents or underwriting utility revenue.