Best Practices When Renting To Roommates

There is a rise in the number of people who choose to be co-tenant renters. Even in the Pre-COVID-19 Era, the percentage of people living as roommates has seen numbers not seen since the last depression. According to a survey carried out by Pew Research Center in 2018, almost 80 million adults lived with someone whom they were not romantically involved with. 

Experts believe these numbers to be even higher in 2021 pushed by the economic struggle caused by COVID-19.

The rise of shared living is already having implications in the nature of the household finances. Having two adults who are unrelated living together as roommates with only one of them as the head of the household in the contract, may give way to unexpected “inconveniences” for landlords and tenants themselves.

When receiving applications for doubled households make sure that you consider the following recommendations in order to keep the best practices in the lease agreement.

Joint Liability

Make sure that the lease agreement states that all roommates are the primary tenant. Having all co-tenants as a single unit in the agreement will make things easier for the landlord. By co-signing the lease agreement, tenants become accountable for the duties and responsibilities acquired through the agreement. If only one of the tenants signs the agreement, there’s no guarantee that a misunderstanding won’t compromise property management. It also makes it harder for a roommate just to leave the property, since it’s in the best interest for all parties to meet the contract accordingly.

In the case that one of the roommates needs to leave the property for whatever reason, the landlord should add that new roommate to the lease agreement.

Legal Roommate Agreements

Suggest your tenants to draft a roommate agreement on the course of action to follow if there’s a disagreement or issue. This agreement can be used to address these issues between the parts, and it will bind them legally should they need to pay for damage or decide to part ways before the contract is due. 

Credit Screenings

Landlords should run background and credit screenings on every single one of the roommates. Make sure that the initial agreement states that in the case of replacement, new tenants must go through the same screenings before co-signing the lease contract. 

Tenants themselves may not be aware of poor credit background or criminal records in the replacement. So, save yourself and your tenants any issues that may spring from unexpected circumstances.

Say No To Subleasing

Subleasing a room or any other area of the property may occur if two adults who are not romantically involved are allowed in the lease contract without joint liability.  

An app like Airbnb, in which people can rent rooms to stay for days and even months may give room to tenants considering subleasing to help reduce costs on living. Legally, only tenants in the agreement are jointly and severally liable for the obligations in the contract.

Most lease agreements state that tenants must notify the landlord of any new prospective co-tenant, making it a violation to the contract to operate subleasing at any level.

Additionally, all lease contracts should have a guest policy to make sure that no one stays in the property for 30 days. Including a legal provision on the lease agreement to make guests jointly liable will allow landlords to run new credit and criminal screenings on anyone staying in the property.

Never Divide Security Deposits

Landlords can return the security deposit only when all tenants in the contract are present. Some tenants will likely request a portion of the deposit or deposits, since there is no way for the landlord to know how much each of the roommates pitched in with, dividing the amount “evenly” may not be the best idea. The distribution of the deposit should not be the landlord’s obligation. Let tenants handle themselves here. 

One Check Per Monthly Rent

Just like roommates, monthly rent should be treated as a single unit. Never take two or more checks or payment methods. Make it clear for the tenants that it is not the landlord’s obligation to worry about collecting the money from different sources. Include a provision in the agreement to state the importance of this.

Tenant Representative

Although all tenants are equally responsible for the lease, landlords should request tenants to designate one of them as the representative. A representative will facilitate the flow of information from and to the landlord. It will keep information clear, avoiding miscommunication between the tenant and the landlord, which will simplify the overall compliance of the lease contract in the property.

Keep in mind that you should check on regulations in your state. Consult a legal professional before making any changes to the lease contract. The information in this article should not be considered legal advice.

This post is filed under: Landlord & Property Management