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Keeping tabs on one tenant for a long-term lease can be a challenge, but the work grows exponentially when you add extra bodies. Allowing roommates in your rental properties can be a profitable way to fill vacancies, however, it also brings up some special issues for landlords.

Make sure your roommate rentals don’t end up costing you profits:

Who is the tenant?

Don’t go for the “one tenant is in charge” approach to roommate rentals if it can be avoided. It’s best to have each adult occupant obligated on the lease. Otherwise, it can quickly become impossible to evict the current occupant, or to collect unpaid rent.

Have language in the lease that prevents a revolving door policy where overnight guests soon turn into long-term occupants, and the person who signed the lease is long gone. 

Is the lease legal?

It has become something of a trend in college towns for cities to limit the number of people living in rental housing — especially single-family homes located in established neighborhoods.

While those laws are undoubtedly directed at rowdy students, landlords renting to established tenants are still bound by the laws.  Know what restrictions might apply in your area.

If not, the lease itself may not be binding, and that’s going to cause problems when it comes time to collect rent.

It is the landlord’s burden to keep track of how many people are living in the property at any given time.
Distributing the Deposit

Don’t give in to roommates who want to move out early — and want to take their portion of the deposit.  The deposit should be distributed only at the end of the lease, and only after the tenants have removed their belongings and you’ve had a chance to look around.

The tenants together are entitled to an accounting and the return deposit.  Partial refunds will lead to big-time trouble if there is damage to the property.

Whatever deals the roommates may have made with one another generally are not binding on the landlord.

When a roommate goes rogue and wants to move out early, the lease is there for your protection.  Don’t make deals that compromise your legal rights.

If each tenant is not committed for the long-haul, consider a shorter-term lease.

With AAOA, landlords have resources at their fingertips. Check out our Landlord Forms page.

American Apartment Owners Association offers discounts on products and services for landlords related to your rental housing investment, including rental forms, tenant debt collection, tenant background checks, insurance and financing. Find out more at www.joinaaoa.org.

 

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