Fred and Joe want to share an apartment. They fill out a rental application. Everything seems all right, and you rent to them. Both of them sign the rental agreement. Two months later you get a check from Fred for half the rent, but nothing from Joe. Fred says Joe doesn’t have the money right now. What do you do?
Julie and Joan rent the two-bedroom unit of the triplex you own. Three months later Julie and Joan have a major disagreement. Joan can’t stand Julie’s boyfriend, who, of course, has moved in without your permission, and Julie is moving out. She wants her share of the security deposit back. Do you refund half of it? What about the boyfriend?
Ruth, Roxanne and Roger want to rent the three-bedroom townhouse you own. They look like good tenants, good credit, good rental history, plenty of income, so you rent to them. Roger is a long-haul truck driver, so is gone for several days at a time. Roger just wants to rest up when he’s in town, so he’s quiet and doesn’t disturb anyone. But Ruth and Roxanne are party girls. While Roger’s out on the road, they throw wild parties that disturb the neighborhood and bring the police. Your rental agreement is clear that that kind of behavior is not acceptable. But it’s only Ruth and Roxanne causing the problem. If Roger was home, they would be fine tenants. What is the appropriate action for you to take?
You show up at the door of one of your rental properties to make a repair and someone answers the door wanting to know who you are. The same question had popped up in your mind. You reply “I’m the landlord, and who are you?”
“Oh, I live here,” says your “new” tenant. Mind you, you have never seen this person before, you have never received a rental application from him, and certainly have at no time given him permission to move in. You wonder who else is living there you don’t know about.
All four of these situations are common with landlords who rent to roommates. It seems as if there is always turmoil, part of the rent not paid, complaints from neighbors, and people moving in and out. You feel as if you are stuck in the middle.
If you handle it properly from the beginning, while you may still face the same situations, at least the procedures for dealing with them will be spelled out in advance. That way you will know exactly what to do when each occurs, and there should be no question from the tenants.
Landlords create their own problems when they don’t take charge of their properties. Roommate squabbles and issues are some of the most frustrating for landlords since it seems as if everything is always in turmoil. The only way to control these situations is to take charge from the beginning, to know exactly how you will handle every permutation that roommates throw at you.
Your first job is to make sure that your rental agreement has no language that could be construed as creating separate tenancies for each of the roommates. Then, to make sure that each roommate understands the rules, make a special roommate addendum. Your apartment or landlord association may have one available (though many do not issue that form).
If you have separate tenancies for each roommate, sorting out problems and incidents becomes a tangled web or he said-she saids, claims and counter-claims. Do not put yourself in the middle of these situations. You only want the rent paid, a simple way to account for deposits and damage, and assurances that house rules apply to all roommates.
Just One Agreement
There must be one and only one rental agreement, signed by all roommates. If you have a separate agreement for each roommate, then you have created separate tenancies and have to deal with each roommate separately. That means if you get only part of the rent, you are stuck going after the roommate who didn’t pay. If one roommate moves out, you have to try to sort out how much of the security deposit is going to be refunded and how much goes to damage (as well as trying to figure out who caused the damage).
The Rules for Roommates
- First, every roommate is equally responsible for what occurs in the property and the rent. Over and over landlords hear the excuse “Joe didn’t have his share of the rent this month, it’s not my responsibility.” Well, yes it is. It is one tenancy, and each roommate is jointly and severally (that’s legalese for equally and totally) responsible for all the rent.
- That means if one roommate doesn’t have his or her share of the rent this month, it is all of the roommates’ problem, not just the one who doesn’t have the rent, and certainly not yours. You either get all the rent, or they all move out. Don’t ever accept partial rent, unless, of course, you have a signed “One-time Partial Rent” form.
- Second, when one roommate moves out, you do not refund part of the security deposit to the one moving out. You refund it only when the tenancy ends: that is when all current and/or subsequent roommates vacate. Then you provide an accounting according to state law. (Some state laws differ as to how security deposits are handled, and you need to check your law to ensure you can use this system for your properties.)
- Roommates who are vacating the unit need to get their portion of the security deposit from a roommate who is moving in. It is not your concern if a vacating roommate gets his or her deposit back or not, since the tenancy paid the deposit, not the roommate, and the tenancy consists of all roommates living in the property then and in the future under that rental agreement..
- Third, all new roommates must have approved rental applications before they move in. Furthermore, after they are approved, they must sign on as an additional roommate and sign the roommate addendum.
- Under no circumstances should the new roommate sign a separate rental agreement. Rather you need to create an addendum that states that the new roommate is becoming a part of the tenancy created by the original rental agreement and acknowledging the existing rental agreement that includes the roommate addendum. [AOA members can use one of two roommate addendums – AOA forms 118 and 124.]
New roommates, since they are part of the existing tenancy, also take on the existing state of the tenancy. So if any rent is owing, that rent is also owed by the new roommate; if there is any damage to the property, the new roommate assumes joint and several liability for that damage. It is up to the new roommate to get an accurate accounting of any rent owed or any damage from either or both the other roommates and you, the landlord. You can have the accounting of the rent ready, but accounting for the damage will require an inspection of the unit.
If the new roommate has any questions or concerns, those must be resolved before move-in if he or she is to avoid responsibility for rent owed or damage. Rent owed must be settled with you and damages paid for if the new roommate is going to avoid responsibility for one or both.
If you already have roommates whom you have rented to as separate tenancies, you are probably stuck with the existing situation. Changing the rules would require that you terminate each tenancy and start over again with a new agreement putting everyone together under one agreement. The existing tenants probably wouldn’t go for it since it is not to their advantage.
Two Bad, One Good
How about the case of Ruth, Roxanne and Roger, where two are party girls and the third is hardly ever home, but good when he is? It’s too bad that Roger is stuck in a situation such as this, but if the agreement was properly drawn, he has to take the heat for his roommates. The situation is no different than if he had been home consistently and had to endure his party-girl roommates.
It is probable that Roger knows almost nothing about the problems his roommates are creating. If he did, he might speak to them about it, even though it would probably do no good. Obviously, you would welcome Roger as a tenant, but would rather be rid of the two troublemakers. If it were only that easy.
The best way to proceed is to send a notice to all three tenants that you are terminating with cause. That means the irritating tenants have 10 days (two weeks, or whatever is required in your state) to clean up their act or move out in 30 days. (Check your state law for the exact procedure.)
Be sure to send the notice to each tenant individually so that Roger will get it. Otherwise the two girls could hide it from him and he could be surprised at having no place to live when he returns from one of his driving jobs. Then you would have a real public relations issue, in spite of the fact that you did everything by the book.
If you have one, you could also offer Roger a small apartment that had a rental rate approximately what he was paying with the Roxanne and Ruth. Tell him that you would love to keep him on as a tenant, but that the girls just aren’t going to continue living in your property.
Renting to roommates, as opposed to couples or single people, presents its own special challenges and aggravations. What you need to do to make it as painless as possible is make sure that first, you understand what the roommates rights and responsibilities are and, second, that they know what they are.
If you don’t do that you will have one headache after another trying to collect rent, assess damages and keep track of whom you are renting to.
Bob Cain, president of Cain Publications, Inc. has been a publisher and professional trainer and speaker for 20 years. For over 25 years now, Bob has been publishing information, giving speeches, putting on seminars and workshops, and consulting for landlords on how to buy, rent and manage property more effectively, as well as courses for his own customers through Cain Publications’ subsidiary, the Rental Property Reporter. For more information, visit www.rentalpropertyreporter.com. Reprinted with permission of All Property Management.
All Property Management is the largest network of property management services on the Internet helping to rebuild the real estate industry by providing property owners the resources to turn their real estate holdings into thriving, lucrative investments. Find your property manager at www.allpropertymanagement.com.