question about renting to unrelated groups

12 Replies

Well, my weekend showing went very well. I had six families/groups view it, and I've received applications from four of them. Not too bad. I felt good about every group who came through. Nobody was picky or asking for modifications up front.

I had one group that I'm a little uncertain about. Actually, they are third in line for review, so I may not even be checking them out, but I wanted to see what people think about applicants like this;

Two women showed up to look at the house. They were both in their 20's (my guess, I haven't actually checked). They were friends, not related, and want to rent the house with their boyfriends (so four 20's adults total). They (the two viewers) told me they (all four prospects) had reliable jobs and plenty of cash. They got all four applications back to me expeditiously (within a few hours), which probably is not a bad sign.

My main concern is "division of financial responsibility" (to make up a phrase); by that I mean, if one person moves out, will the others be able to make the rent? What if two move out (for example one couple decides to get married and get their own place)? Let's say two move out, the other two want to stay, but can't easily make the rent and want to find other tenants to move in??

Has anyone else dealt with this situation in the past? Is there an accepted process for dealing with such eventualities? Or should I just consider them ineligible?

Let me preface this by saying I'm not an attorney, and I welcome corrections to my understanding:

If law allows it, I've read that it is recommended to insert a "joint and several liability" clause into your lease. The short story being that every lessee will be held responsible for the entire rent. You can pursue any judgments in your favor against any lessee, and then it would be up to the lessees to sue each other to establish liability for paying the judgment. Should you just have a "joint liability" clause, one (or more) lessees could skip town and you'd have to sue them to recover the lost money.

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So far I believe @Mike M. gives some good advice about making each tenant liable for the whole rent. Frankly, it sounds pretty risky to me. It reminds me of leases that are written for college properties where each person rents a room, had their own lease agreement and pays their own deposit. One moves out and you fill the room with another tenant. Higher rent generally offsets the risk factor for the landlord.

If I was you and could fill the unit with traditional renters, I would go that route.

If they had 'plenty of cash,' they wouldn't be living with roommates.

It isn't uncommon that 20-somethings want to split houses. What I don't like about this setting is 2 boyfriends. Invariably, someone will break-up and/or move. There's the "3 or more unrelated" in some areas, too.

Joint and several liability is probably your best bet. I added that to my lease, even though I don't allow roommates to add people. Just make sure that you don't rent by the room. It's all or nothing- they're all liability for full rent, or they can't live there. If someone moves out, it's their problem to come up with full rent on time-- make sure they know that.

Get a good deposit.

I would make them pay me with one full check-- no individual checks. One full check for full amount by rent due date, no exceptions. Ditto with deposit. You don't want one paying partial payment on time, then another roommate paying partial. One check to you on time, or eviction begins for all of them.

I would say that 20s and houseshares mean:
- more guests over, more likelihood for parties
- 20somethings change jobs and move more often
- couples = break-ups
- roommates = break-ups
- usually 20s spend a good bit of income on student loans and entertainment.... check income and credit for each to see if they can really afford the rent.
- 20somethings = not always clean or careful with property
- 20somethings aren't known for their great credit.
- 20s/30s seem more likely to smoke. Ban smoking anywhere on your property line. They smoke, you give notice to vacate and charge for full damages. My new tenant/roommate is 20something. I have a long no smoking clause in my lease. I said they're responsible for full deodorizing and replacement of all carpets, cabinets, wall paints, appliances, inside and outside. No smoking inside on outside of property, including lawns, patio, and garages. (Of course, it's not like I could likely collect the full amount... but so far it's been a deterrent for them to smoke on my property.)

Families with kids:
- more wear and tear or spills with the kids
- liability with kids (stairs, bathtubs, etc.)
- perhaps less likely to move as often as roommates
- perhaps more likely to be a little more careful and treat the house as their 'family home'
- kids are rough on houses
- perhaps more established with finances, job, credit (but not enough to buy their own house)
- might stay in your house longer, meaning you don't have to do this as often.

Like others, I would go with "traditional" (family) renters if possible.

The roommate setting with 4 people is less desirable. You can't advertise "only families" or "must be above 30"-- but you should be able to require a certain level of credit, income, max occupancy (maybe, check your area), and rental history.

It definitely sounds like I should only rent to this group if I'm *really* desperate (i.e., nobody else worked out). Fortunately, it looks like I've found a good, peaceful, mature couple with good income to take the house, but I was getting worried because I only had four applications on hand, this was one, and the "lop-sized income" family was another. I hope the signing this afternoon goes peacefully, and I can just relax for now!!

However, I'm going to put the "joint and several liability" clause in my contracts anyway; it would have been relevant for the un-married "lopsided income" family as well!

Thanks for all the excellent advice!

If it gets to the point where you actually evaluate them as future tenants - make sure you do a very thorough screening on them. Go to landlord previous from the current one to find out what kind of tenants they were. (This may involve 4 different landlords if they were living apart before). Verify income from all applicants. Many times the women are working and the guys are freeloading - always needing money to get the car fixed so they can look for a job, but never finding one. Needing money for alcohol & drugs. When checking employment see how long they have lasted at each place also. Prescreen - Prescreen - Prescreen! Personally, I think you would have a can of worms on your hand & it would be better to skip them and move on to next qualified applicants.

My advice would differ a little from above.

I would put one person, and one person only, on the lease. Look through the applications and pick the best of the lot. This way you get a single point of contact for issues and you let that person do the rent collection for the rest of the crew.

It's really hard to pursue some people for cash if they break the lease. The whole 'blood from a turnip' thing. And the joint liability may work, but trying to figure that out who to pursue for how much is probably going to cost more attorney's fees than you want to pay.

If this were to become a big part of your business, it might be a good idea to figure out how to make the joint liability work. But for a one-off deal, I'd just pick the best of the lot for the lease and pray.

@Michael B. : but then what happens if that person is the one who breaks up with his/her companion and moves out in a huff?? It seems like that leaves everyone hanging...

I suspect that's where your thought of "pick the best one of the bunch" comes in... but I suspect that the accuracy of my judgement of people won't win any awards in animal science, so to speak...

... which probably *also* argues for just avoiding the situation entirely...

The reason you put ALL on the lease is that you get a judgment against each and every one of them and each of those judgments is for the full amount due. You don't have to figure out which one is responsible for what portion. You might never get paid, but once somebody hits a point in life where they want to buy a house, they will have to clear those judgments. The more of them attached to judgments, the more likely you have a chance that somebody hits an event in life that leads them to pay.

Okay, I'm going to view this in the context of: The only reason I would consider this situations is one or more of:
1. I can't get simpler applicants on my property, and must take what I can get, or
2. I can financially afford some risk, and I morally believe in giving young folk a chance in life.

In either of these cases, I think that @Steve Babiak 's vision offers some benefits over @Michael B. 's; I think I would try to sit them all down, point out my reservations about the situation, explain to them why I'm giving them a chance, and then require them all to initial the "joint and several" statement... the point being, that I'm offering them all an opportunity to demonstrate their adult responsibility. Then, I let them sign the Lease, understanding that each of them has accepted the responsibility for their actions... and then I grab the dice and run, hoping that my faith in humanity is upheld!!

Okay, I'm stating this flippantly, but if my initial assumptions (about why I'd be here in the first place) are valid, maybe this is a reasonable gamble... after all, when I was 22, people *did* trust me with their homes...

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