Renting a single-family home to multiple tenants has become increasingly popular, especially in college towns and neighborhoods with a high cost of living. The tenants save money, and the landlords can walk away with considerably more income than they would from a single renter.
However, more tenants can also bring more problems, such as internal disputes, property damage and noise issues, just to name a few. This is why we’ve assembled these 9 common sense tips to help you keep things running smoothly when renting to roommates.
#1. Create a roommate agreement
You can’t force your tenants to follow a roommate agreement—but you can strongly encourage them to do so, as it will make life much easier for everyone. A roommate agreement details the rules, and responsibilities for living in a shared home. The beauty of such a document is that it can stop issues before they become problems, with rules for:
- Having guests
- How bills get paid
- Late-night noise
- Security deposits
- Who gets what room, and how that might affect their monthly rent
- Parking
- Household purchases
- Food sharing
- Cleaning and groundskeeping
- Pets
- ‘You break it, you buy it’—who is responsible in cases of property damage
Is this agreement legally binding? No. But there are ways landlords can re-enforce it, which brings us to tip #2.
#2. What one tenant does affects every tenant
The above ‘golden rule’ should be relayed to each tenant before they sign the lease, along with this reminder: a landlord can terminate the lease agreement for all the roommates if one violates a single clause in the lease. This is not meant to create a contentious relationship with your renters from the very start. It will, however, underscore this all-important point: co-tenants must work together to uphold the terms of their lease.
#3. Specific lease language
The most important responsibility co-tenants share is the payment of rent. This is where a joint and several liability clause may be appropriate. It simply states that everyone who signs the lease is responsible for the rent. If one tenant can’t pay, that does not mean the others can just kick in their portion of the rent and call it a day. All co-tenants on the lease must make sure that the full amount of rent is paid each month. How they decide to split that is up to them.
#4. No sublets and no Airbnb!
When you are dealing with multiple tenants, you are dealing with multiple life situations. One tenant might need to leave town for work. Another might move in with a boyfriend or girlfriend. Both might want to sublet, and that’s where the trouble can start. Sublessors are not on the lease, which means they are not liable for rent, property damage, or any of the obligations stated in the lease agreement. In certain states, sublessors can even claim squatters’ rights, and it can take months to evict them.
Make it easy on yourself. Say no to sublets and Airbnb!
#5. Do not divide security deposits
A multiple tenant lease agreement can impact the return of a security deposit. Let’s say at the end of an initial 12-month lease, two roommates want to leave, and two want to renew. You should not return the security deposit till the property is fully vacated. Let your co-tenants work out the security deposit split among themselves. The same goes for property damage. If the security deposit is $1,000, and there is $400 worth of damage, the landlord need only refund $600 and let the tenants divide the balance among themselves.
#6. Make sure you screen every tenant
When one roommate decides to move out, the remaining tenants often take it upon themselves to find a replacement. Be sure to screen this new tenant, no matter how reliable his or her predecessor was. Run a background check, get paystubs, bank statements, and a credit report. Make sure each new co-tenant is as reliable as the last.
#7. Encourage your tenants to get renter’s insurance
In a multi-roommate house, personal property can get lost, stolen, or damaged as fast as one can say, ‘party at our place!’ Ask your tenants to get renter’s insurance. It will keep the peace while keeping you out of internal disputes.
#8. Ask your tenants to appoint a representative
Speaking of avoiding disputes—it’s helpful to have a single tenant represent all of them. This way, you have one consistent point of contact when dealing with any household issue.
#9. Let your lawyer review the lease
A rental lease is a complex legal document unto itself. The complexities can increase exponentially when it is a multiple tenant lease agreement. This is why we suggest letting your LegalShield provider lawyer review your multi-tenant lease before anyone signs it. Make sure all necessary clauses are in place, and you are protected from the scenarios listed above.
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