What are the benefits of having tenants on the same Lease Agreement versus separate agreements?
Landlords have several good reasons for wanting to put tenants in the same unit on the same Lease Agreement, including a desire to hold all tenants accountable for the entire lease and the promise of an easier-to-manage rental. In some situations, however, a landlord might prefer to have tenants on separate leases.
When there is a single Lease Agreement that all tenants sign, all tenants are individually responsible for all obligations under the lease. If one tenant does not pay their share of the rent or causes damage, all the tenants that signed the lease are on the hook. It might also be easier to manage the rental as the landlord does not have to replace tenants individually if one decides to move out. The tenants are responsible for the same rent, although they may also find a new roommate to move-in.
With separate leases, each tenant is generally only responsible for their own portion of the rent listed in their agreement. This arrangement is common when the landlord rents out individual rooms that share a common area, kitchen, and other amenities. Separate leases can sometimes lead to higher rents compared to renting the unit as a whole. This can be particularly true in places like college towns. The landlord also gains the flexibility to choose to not renew or, if necessary, to send an Eviction Notice to individual tenants rather than the entire group. However, with separate leases the landlord may face complaints about conflicts between tenants, or disputes over damage to common areas. Also, if a tenant is unable to pay their rent, the other tenants are not responsible for making up the difference.
Can I hold a single tenant accountable?
Generally, the primary tenant is responsible for finding and managing the other tenants. This reduces the landlord's control over who is in the unit, although the landlord may still require screening in most cases. In cases of non-payment or damage, the primary tenant is generally responsible for paying the landlord, and then collecting from the other tenants. It can be difficult, but not impossible, for the landlord to collect from the other tenants if the primary tenant disappears or becomes uncooperative.
Can I require tenants on separate leases to split the utilities or other bills?
You can usually require tenants on separate leases to split utilities or other bills. You would usually want to keep the bills in your name when using separate leases since no one tenant would be responsible for the others. It's common to split these charges based on the number of tenants in the unit.
Check your state and local laws for any specific requirements in your area regarding how you can allocate utilities or if you're allowed to charge a fixed fee or a percentage. Keep in mind that the rules may be different for multiple tenants in a single unit versus multiple units on a single meter.
What is joint responsibility?
Joint responsibility is the idea that each tenant is responsible for all lease obligations. This applies in situations where you have a single Lease Agreement with multiple tenants on the lease.
When multiple tenants are on the same lease, the agreement often states that they are "jointly and severally liable." This is a specific legal term that can make it easier to enforce your rights to recover from your tenants. In this situation, if one tenant cannot afford rent, the other tenants are still responsible for the full amount.
For example, if one tenant in a joint lease causes damage and is unable to pay or moves away while the other remains, the remaining tenant is on the hook for the damage and back rent as well. The remaining tenant can sue the tenant who caused the damage to recover what they had to pay to cover for them. In this situation, a landlord does not have to prove who caused the damage. You may only need to prove that one of the tenants was responsible in order to recover from one or all of the tenants. Whether one tenant was individually responsible or has to reimburse the other tenants is a separate matter between the tenants.
Unpaid rent is similar. If one tenant in a joint lease doesn't pay their portion, you have a right to recover from the other tenant or tenants. The others can then try to recover from the tenant who didn't pay.
How can landlords avoid disputes on a Lease Agreement?
A main goal as a landlord is to create a Lease Agreement that reinforces your rights under the type of tenancy arrangement that you've chosen. In addition, tenant satisfaction is also important both from a business standpoint and to reduce the likelihood of legal disputes. Landlords might be able to reduce the possibility of disputes and make it easier to resolve disputes by planning ahead and being proactive in the Lease Agreement. In a joint lease, for example, successful landlords might want to make clear that tenants are jointly responsible for the lease and that any issues between the tenants are only between the tenants. As a landlord, you may wish to suggest that your tenants sign a Co-Tenancy Agreement to ensure that they are on the same page with each other.
Also, in both joint and separate leases, you may want to include house rules, such as quiet hours and limits on guests, both to give your tenants something to fall back on and to give you provisions you can enforce if one tenant is disturbing the others. To avoid becoming involved in tenant disputes and to reduce the chances of a tenant wanting to break their lease due to disputes, you may want to require tenants try to mediate conflicts. This can be a particularly good option if there is a strong tenant organization providing this service in your area.
Can tenants split security deposits?
In a joint lease, splitting deposits can be convenient for the tenants, but it can also blur the idea of joint and several liability. If you accept separate payments, make it clear to the tenants that the payment isn't "their" deposit but a share of a single deposit. Making this point clear can protect a landlord if only one tenant moves out and demands their security deposit back. If in that situation, the other tenant or tenants may pay the leaving tenant their share of the security deposit, but landlords typically do not have to do so.
At the end of a joint lease, if all the tenants are moving out, landlords often ask each tenant for written confirmation on how to return the deposit or may write a single check to just one or all tenants. In separate leases, it is common to have individual deposits because tenants tend to have individual responsibility for their own private spaces.
Is each tenant required to have renters insurance?
If you want to require renters insurance, it is important to understand how it works with multiple tenants. Most policies require each person to be covered to be named or listed in the policy. Additionally, policy coverages and costs can vary widely depending on what you require. You may want to carefully consider what minimum coverage requirements you want to hold your tenants to, as well as request annual confirmations that the policy is in good standing, with all tenants listed.
If you have questions about managing multiple tenants in the same unit or rental, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.