Legal Question in Landlord & Tenant Law in California

The landlord did a big "no no" by not paying the water bill. California courts are clear on this point, the landlord may not discontinue utilities he is otherwise obligated to pay. I would ask if the lease agreement specifies that the landlord is supposed to pay the water bill? Also, how much are the water bills might matter, because from an equity point a view a judge may be sympathetic to the landlord if you are using an unreasonable amount of water, but absent that this looks like retaliatory and/or constructive eviction, as well as breach of contract, breach of the covenant of quiet enjoyment, breach of the covenant of habitability, and retaliation for your repair complaints about electrical and heating primarily (termites too if they were interfering with your quiet enjoyment). You may have a claim for attorneys fees and penalties due to this action in cutting the water if the landlord had a clear duty to pay it... So yes its time to hire an attorney.

What to do is a challenging task and I would likely advise should be a rent deduction withholding strategy. You should engage an attorney who will take your rent deposits into his trust account and that this should be communicated to the landlord -- i.e., that you have placed your rent in trust to prove your bona fides intention to pay rent if any is actually due though your position is that none is due because of the property issues and that attorney fees and costs are owed for the retaliatory actions of the landlord. Simultaneously, your attorney should demand an offset in whatever amounts are claimed to be owed due to the reduction in habitability and use as well as for offset in you paying for the water and doing the necessary repairs (yes you should pay the water and deduct this from rent). I know this is an expensive course to take and attorneys aren't cheap either, but you are in a fire fight and this in my opinion your best option.

If the landlord does not agree to apply your funds in trust and whatever future rents toward the necessary repairs, then you could consider moving out, not pay any further rent and sue the landlord for relocation plus difference in rent at your new rental to the extent it is comparable and a higher rent for the duration of the original lease term.

Challenging situation and I wish you good luck. I hope this was helpful.