Leases For Multiple Tenants: 8 Tips For Landlords

While many landlords are accustomed to leasing their rental property to a single-family or individual, often landlords will need to rent their property to multiple tenants under one lease. Renting with roommates is becoming increasingly more prevalent especially in college towns and areas where the cost of living is high – this is because renters can save money on their housing by doing so. Tenants often find roommates they might not know – because of this,  there are a few tips you should follow when leasing to multiple tenants to make the rental process smoother for you and the renters. The best strategy is to be prepared and set both the landlord and the roommates up for a successful tenancy. Keep reading below to learn some easy ways to help everything run smoothly when renting to roommates: 

#1: Encourage Roommate Agreements 

A landlord typically has no involvement in roommate agreements, but that doesn’t mean you can’t suggest or encourage one. A roommate agreement is a document signed by each tenant that provides a detailed explanation of expectations, rules, and responsibilities for living in the shared unit. The agreement can address many issues before they become a problem, for example:

  • Whether it is acceptable to borrow personal items
  • Whether food will be shared
  • Rules for having guests
  • How bills will be shared and paid
  • Room assignments
  • Cleaning responsibilities
  • Noise issues
  • Security deposits
  • Obligations upon moving out of the rental unit

Keep in mind that while roommate agreements are between the tenants, and not legally binding, a judge can enforce financial agreements, such as rent being divided fairly among tenants and paid in a timely manner. Remind all tenants the agreement is for their personal use and the landlord does not resolve disputes. If tenants come to you with their disputes, you should remind them that you are not responsible for solving their issues and will not take sides.

#2: Advise That The Actions Of One Tenant Can Affect Everyone

Before the lease is signed, it is a good idea to let all tenants know the actions of one person can have potentially negative consequences for everyone living in the rental unit. Make sure they understand even if just one person violates all or part of the lease, the landlord can terminate everyone’s tenancy as a result. Before you are faced with a group of upset and angry roommates insisting they “didn’t do it”, advise them they must feel comfortable living with each other since all co-tenants are responsible for the negative actions of each person. While a roommate agreement will help establish respect and boundaries between the tenants, this reminder will be helpful for them to know what they are agreeing to.

#3: Don’t Allow For Subleasing In The Rental Agreement

Unexpected things happen during a lease agreement that may result in one or more of the tenants wanting to move out. It could be that one of them decides they want to move in with a boyfriend or girlfriend, or one decides to get married, or the roommate situation isn’t working out. There are a variety of reasons why tenants will want to sublease their apartment, but it can turn into a tricky situation that could be consequential for the landlord. This is because sublessors don’t actually sign the lease which means they are not jointly and severally liable for rent or other obligations stated in the rental agreement. The sublessor will go through the renter who signed the lease agreement who will then pay rent to the landlord – it can get complicated quickly especially if one of them neglects to pay rent. While the decision to allow subleasing might be necessary for specific instances, it is up to you as a landlord to decide what you want to do. It is important you protect your own interests by making sure each tenant is responsible for meeting the terms of the lease, and disallowing subleasing will make things easier in the long-run.

#4: Make Sure There is a Joint and Several Liability Clause Within the Lease Agreement

This is pretty standard when it comes to leases with multiple tenants, but it’s a good refresher that both you and your renters need to understand. It is also one of the most commonly confused terms for renters, as our CEO and founder described here. The basics of joint and several liability are that everyone who signs the lease is responsible for rent – if one tenant can’t pay, that doesn’t mean the other two can only just pay their portion and call it good. If they signed the lease, all tenants have to make sure the full amount of rent is paid every month. Having this on the lease and explaining it to tenants is essential when it comes to multiple tenant leases – how they decide to split the rent is solely up to them.

#5: Don’t Divide Security Deposits

Before the original rental agreement is signed, let all tenants know security deposits will not be divided, and when they are returned, it will be via one check only. You could also spell this out specifically in the lease to mitigate confusion. Renting to roommates means there will probably be some unique situations when it comes to renewing leases. For example, if a lease is 12 months, and at the end of that years’ time, one roommate may choose to leave, and the other two may choose to stay and renew the lease for another year. Let them know the security deposit will only be returned when the rental unit is completely vacated and all damaged is assessed. It is up to the roommates to work out any issues regarding security deposits that may arise if one tenant decides to leave.

Another thing to keep in mind is the amount of the security deposit a landlord will return at the end of a tenancy – keep in mind that joint and several liability still applies to damages that occur. Suppose at the beginning of the lease, four tenants paid a security deposit of $500, each one contributing $125. When the apartment is vacated and the damage is assessed, you discover that there is $200 worth of damage, and you can only return $300. Make sure the tenants know it will be returned in one check and it is up to them to decide how to divide it amongst themselves. Here is a sample letter for damages you will need to send to tenants.

#6: Ask the Tenants To Appoint a Representative

By asking the tenants to appoint one person as a representative, you can ensure you will always have a consistent contact for all forms of communication. Rather than having to contact each tenant individually, this will be the person you speak to about issues or concerns that arise for you or for them such as submitting maintenance requests.  A good practice is to make sure all the roommates understand being the representative does not make this person solely responsible for any incidents that may happen, but rather, they are the point of contact for everyone living in the property. If you need to get in contact with the tenants, this is the person you can get to know and expect to communicate with if the rent is late.

#7: Always Screen Replacement Tenants

When one or more roommates decides to move out of the property at the end of the original lease, it is common for the remaining tenants to find one or more replacements they would like to add to the renewal. Remember to screen the replacements in the same way you did the original tenants. It happens often in the leasing industry that when the original roommates were excellent tenants, a landlord will add a replacement tenant to the lease without question. Don’t make any exceptions regarding income and credit requirements, background checks, or other screening requirements – it’s essential to protect your property by making sure there are no red flags in the screening report.

#8: Encourage or Require Renter’s Insurance

Encouraging or requiring renters insurance is an easy way for roommates to stay protected if any of their belongings are stolen or damaged by covered incidences. There are many benefits of renters insurance and renters never know what might happen, who might leave the door unlocked, or if any accidents will occur. 

Having leases with multiple tenants can be straightforward as long as you follow the suggestions above and maintain frequent communication with your renters. If you live in Montana or Texas and are in need of a lease, don’t forget to check out Turbo Tenant’s new customizable lease agreements. 

FAQs for Leases for Multiple Tenants

Should I allow subleasing in my lease agreement?

While it is ultimately up to you as a landlord, we discourage you from allowing subleasing. It can complicate things since sublessors don’t sign the lease and will have to go through the original tenant on the lease – if someone misses a rent payment it affects everyone involved. Sometimes subleasing might be necessary in your area, like if you rent to college students who are often in and out, but in that case, you could make an addendum to the lease to have the new tenant sign. 

Am I in charge of roommate agreements?

No. While you should encourage roommate agreements, it is not your responsibility to be in charge of them or settle disputes between tenants. Roommate agreements will hopefully help mitigate the problems that roommates may face with each other.

Should the rent be paid in full and by a single method? 

Yes. As a lease with multiple tenants makes them jointly and severally liable, you should only collect rent one way and one time when it is due. The tenants themselves will have to decide how to split the rent and who is in charge of actually paying the landlord.

This post was updated on October 16, 2020.

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