Is propane a utility?

By
Real Estate Agent with Coldwell Banker High Country Realty

In real estate, it is often essential to try and anticipate the problems that may arise. An experienced agent can help minimize problems by solving them before they become a serious issue. In the mountains, the problems can sometimes be anticipated. For example the problem of pro-rating the cost of propane gas remaining in the tank at time of closing.

The new 2008 Georgia Association of Realtor's contract, in section 5(C) PRORATED AMOUNTS: states that the parties agree to prorate (2) all utility bills as of the date of closing. The question arises-is propane gas a utility and therefore subject to the terms of this section of the contract?

It is unfortunate when the first time this issue arises is the day of closing. But this happens more often than you would imagine. Therefore the closing is halted as all parties negotiate their interpretation of Section 5 (C). The Seller, of course, says that the propane gas is a utility under this section of the contract, and must be prorated. The buyer says, no-it is not a utility under this section and the cost of the propane gas was included in the sales price for the house and no proration is necessary.

Propane tanks are usually leased from the gas company the gas within the tank is bought and paid for by the Seller. So the question arises is the tank a fixture, probably not if it is leased, if the user fails to pay the lease then the gas company will remove the tank. If the seller bought the tank then it would likely be considered a fixture and stay with the house when sold. The gas within the tank is still a question and should be addressed in the purchase and sale agreement to avoid any misunderstandings at closing. Parties are more flexible and negotiable prior to signing the contract than afterward.

Pat Trainor

http://www.buyblueridgerealestate.com/

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Anonymous
Kim Logan

Just had this come up today in a cloising. No one wins with this!! So what is the answer???

 

 

Jun 26, 2012 04:34 AM #1
Anonymous
Anonymous

The best thing to do is discuss it prior to closing and make sure everyone is on the same page.

Jun 26, 2012 09:29 PM #2
Anonymous
Brandi

Yes, what is the answer?

Feb 15, 2017 06:14 AM #3
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