While many landlords are accustomed to leasing their rental property to a single family, there are many times when a different situation arises. The landlord is faced with renting a property to multiple tenants under one lease. This happens often, especially in college towns. It is even more common nowadays when the use of social media is prevalent, and many people and students are meeting potential roommates online. Although the concept of simply having a roommate is nothing new, many landlords may wonder the best way to handle a lease with multiple tenants. Everything usually seems great at first, but it is only a matter of time before certain situations arise. Let’s take a look at some tips for renting to multiple tenants under one lease while doing what you can to help everything run smoothly.
Encourage Roommate Agreements For Multiple Tenants
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 any 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.
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. This is especially important when renting to college students. 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.
Don’t Allow For Subleasing In The Rental Agreement
There is nothing worse than when a group of two or more people promises to be roommates for the duration of the lease, and then something unexpected happens. It could be that one of them decides they want to move in with a boyfriend or girlfriend or decides to get married. Or, it could be that one of the tenants gets a job in another city and wants to move out. Remember, sublessors don’t actually sign the lease, so they are not jointly and severally liable for rent or other obligations stated in the rental agreement. As the landlord, it is important you protect your own interests by making sure each tenant is responsible for meeting the terms of the lease.
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. For example, it may be that a lease is for 12 months. 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 example is the amount that is returned. 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 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, especially when the issue of replacement or additional tenants is involved.
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. This person should feel comfortable being the representative. 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. In short, this is the person you can contact to schedule things like maintenance or repairs regarding the rental unit.
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.