Should newly added Tenants Pay additional Deposits?

14 Replies

Happy New Year! I need help with something I'm about to do present to my current tenant. I have done my research and have learned that the tenant has unauthorized people living in the property. I plan to meet with the tenant Friday to discuss this and to offer a 2 possible solutions. Solution A. The individuals not on the lease will have to be properly vetted just as the original tenant was. If tenant is not in agreement with this, I will present her with a 30 day notice for ALL to vacate. Solution B. If the tenant does agree and wants all to remain, I will ask for a non-refundable application fee from each person. I do background checks via Smartmove so each individual would pay for this and have to qualify separately.

Now here's where I need help. The tenant has of course already paid a deposit upon move in 2 years ago. Since then rent has increased. Should I require a NEW deposit from each individual? I'm thinking this deposit would be equivalent to the current rent rate.  Or should I required a deposit amount equal to what the original tenant paid? I was thinking that if new people qualify I  would inform them via a new lease agreement signed by all that the deposits they provide would not be returned by me until ALL have vacated the property. If there's a parting of ways these individuals would have to work out their disagreements among themselves and whomever remains would have to provide a deposit refund to the person(s) who vacate. 

I would let them know that you would be going up on the rent as well. The amount of people that increases also increases the wear and tear on your property. I would present it in a manner of if these people stay if this is what the rent will be if you choose not to go with that then here’s your 30 day notice or they can leave

Your tenant allowed others to move in with her, without seeking permission from you. That shows a high level of disrespect and is a serious violation of the terms of her rental agreement.

Once the others have established residency (which they may have already) they have equal rights to tenancy. You must treat them equally as tenants. If the original tenant later seeks your help to get rid of one of the others, the most you can do is give notice to vacate to all, including the original tenant.

How many people were originally in the unit and how many are there now? How many bedrooms?  How many bathrooms?  What are your occupancy standards?

If you allow the extra people to stay, then yes by all means vet them. Same application process and screening standards. Increase rent if you wish. Increase the security deposit if you wish. Let them sort out who pays what. And yes, any security deposit stays attached to the unit until such time possession of the unit is returned to you. They will have to sort out who gets the refund in the end, if there is any.

The smart move would be to inform your tenant that she is in violation of her lease and allow her 7 days to cure. They are out in 7 days or you serve her with a eviction notice for violation of her lease. Hopefully she respects her lease and puts them on the street.

If you do not care that she violated her lease why bother screen them. Either you care or you don't. By requiring that you screen and collect a deposit all you are doing is playing games at this point. Might as well not have a lease at all.

@Marcia Maynard

The house has 2 beds 1 bath. Originally, it is the tenant (whom I have a lease with) and her 3 children. As far as I can tell,  she has moved in 2 adult males. I've just become aware of their presence which is why I will be addressing this matter with her immediately. Per the lease, Only the tenant and her children are allowed to occupy the home. Texas occupancy rules state 3 adult per bedroom. Thanks for the advice. They will be faced with vetting, which will include increase in rent and each must submit or deposit or ALL will vacate.

Before you increase the rent or the deposit make sure you are on MTM. If it is a lease I am not sure if you can raise the rent? 

As for the addtl tenants, screen them as you would anyone, then add them, if they are approved, to the lease. If this is a good paying tenant that is what I would do.   Around here you dont charge different amounts of rent or deposits for number of people in the unit.   Not sure if that is normal elsewhere 

I also dont think this situation means the tenant doesnt respect the landlord. Most people dont read leases and are not really aware of wording about addtl people living there. So unless you had a specific discussion with her about it, i would not take this as anything other than she got roommates

@Val J. . WOW - Six people in a 2/1. That going to be / is already crowded. Depending on where your property is located, you may be in violation of the people per bedroom ordinances, etc. Is there a familial relations among the adults?  

Original Tenant, is obviously in violation of the lease. Having said that, if you had originally leased to this crowd, you probably would not have gotten an increased deposit or rent based on the number of people occupying the property. 

Good luck with this one!

@Jim Cummings

I only know that there are 2 males and one of them is the father to 2 of the tenant's children. You may or may not be right about the additional monies. But, I've known landlords to require   more than the traditional one month's rent for the deposit if the tenant(s) lacked credit worthiness.   This tenant is on an M2M lease. So I can change my deposit and rent requirements. The tenant can accept the terms or vacate next month. Btw, I would not have knowingly rented  to this many people.

@Val J. . I'm on your side - get as much as you can! 

If Male # 1 has a relationship with current tenant or Tenant and male # 1  are rebuilding a relationship, I would consider him. 

Male # 2, IMO, needs to go somewhere else. 

If finding new tenants / getting the property re-leased quickly is not a problem, I think I would tell them all to move. 

Put some thought into what you want your occupancy standards to be.

Although Texas law sets the maximum allowed at 3 per bedroom, you as the property owner can set your maximum lower than that. HUD sets their standard at 2 per bedroom plus one. We set our standard at two per bedroom and can easily justify that for the size of our properties. Consider the impact on your plumbing system too... six people and one toilet?

Is this a family unit or is there an unrelated adult living here? Some jurisdictions don't allow female and male children to share rooms together or to share rooms with adults of the opposite sex. That may not apply to Texas, but it's worth considering. Is someone sleeping in the living room? Some families are fine with that kind of arrangement and it would be okay by HUD standards too for someone to sleep in the living room.

Please give us an update about your meeting with the tenant on Friday. How did it go?

Do any of you with high opinion of moral authority want to get into the business of telling who can be in a relationship with whom?  

There is case law (SCOTUS) prohibiting property associations from restricting occupancy based on lack of family connections.  I don't see courts being any more forgiving to landlords, should a tenant bring a suit.  Tex. Prop. Code Sec. 92.101 sets the max.  If you want to set a policy across all your rentals, put it in writing, publish it to all tenants/prospective tenants, and apply it to all.  Keep in mind, the more "policies" you have, the more complex your business, the more time/energy/effort it takes to manage.

Re: extra deposit - Your deposit is what it is, regardless of the number of occupants, weather there is 1 tenant or 5 tenants, 3 of which are minors.  When your rent went up, that was the time to assess an increased deposit.  I think you would be out on a shaky limb to try to collect now unless they were MTM.

Good luck.

Originally posted by @Jerel Ehlert :

. . .There is case law (SCOTUS) prohibiting property associations from restricting occupancy based on lack of family connections.  I don't see courts being any more forgiving to landlords, should a tenant bring a suit. . . .

FYI -- A few states still officially ban cohabitation (Florida repealed its law against cohabitation a few years ago). Back in the 1960s and 1970s, these bans were present in most states and vigorously enforced as the sexual revolution of that era unfolded.  Many people were impacted. Today, a few people still get caught up in them. For example, when divorcing couples separate, one will sometimes use the fact the other is cohabitating when it comes to arguing who should have custody of the children. Judges in those state where cohabitation is still banned have no choice but to follow the law of their jurisdiction. I'm not sure how landlords are affected, but if your tenant is thrown in jail or ordered by a court to move out, you might have an unexpected vacancy to fill.

@Account Closed you have to delineate Constitutional rights v. family law issues.  Under Moore v. City of East Cleaveland, SCOTUS struck down zoning which prohibited a grandmother from raising her grandchild in the same house because the statute intruded upon the "sanctity of the family" (and other issues).  That was in 1977.  There are other Supreme Court cases that strike down cohabitation restrictions, and it doesn't matter if they are "still on the books", those laws are VOID without further action.

Family courts can set reasonable restrictions on an individual basis "in the best interest of the child" (that's the standard in Texas).

If a landlord wants to push the point, person is still on the hook for rent unless the lease says otherwise, but the landlord has a duty to mitigate damages.  The smart play is to get the court-ordered occupant out ASAP and move on.  If there is a (soon to be ex-)spouse still living there, have a candid discussion quickly.  Get a realistic assessment to see if they can pay all the rent on their own.  If not, assist in moving on.

Statutes that affect large populations v. courts ruling on individual cases.  See the difference?

@JerelEhlert. I'm not an attorney, nor do I believe cohabitation is an issue affecting landlords except in the rarest of instances. I always thought of cohabitation as a man and woman unrelated by blood or marriage living together. In the case you cited, the grandmother and grandchild were related by blood.

I do remember reading a Texas story a few years ago about a high school teacher who was living with her boyfriend (I can't find this article with a Google search). The article said Texas requires its teachers pass a "lifestyle" test each year and the school sends an inspector to the teacher's home. For several years, the teacher was able to convince the inspector her boyfriend was just a renter living in one of her spare bedrooms. Then one year, the inspector didn't buy her story and she lost her job.

To the extent this story is true, I'm not sure how most landlords would be affected other than a tenant who lost a job for any reason might not be able to afford the rent anymore and would face eviction.

I know some property deeds in California have restrictions (such as a ban on selling the property to members of various minority groups) that are OK to remain in the deeds, but are unenforceable in the courts. When the Florida cohabitation law came up for a legislative vote, according to the local news, there was an urgency to get it passed. Perhaps that urgency was based on politics with the electorate rather than legalities in the courts.

There's plenty to say here but I'll just keep it simple: get rid of the two men, period. I would tell them all to leave but you have to think about the children. If she wants to leave, let her.