Renter asking to add another person on the lease

General Landlording & Rental Properties
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Renter asking to add another person on the lease

Sohil Shah
Real Estate Coach · Charlotte NC · Member since 2019 · 22 posts · 0 votes

Have a renter who already signed the lease. Now she wants to add the another person on the lease who is staying in the house with her. Is this a red flag and how do I handle this?

The lease was approved in her name.

She also said that she will turn on the utilities in the other persons name because That is how they are splitting the cost between them. Which I feel like this is not a problem, please correct me if I’m wrong.

The renter needs to have renter insurance and correct me if I am wrong but the person who is on the lease needs to have it in there name correct? Or whoever is staying with them in the house they all have to be on the insurance policy?

Does anyone see any issues with this? Or is this normal?

My concern is that If I add the other person on the lease and let’s say They don’t pay rent because one person lost there job and the other one didn’t. The person with the job can say I will only pay half the rent the other half is owed by the other person?

Never had to deal with issue before.

Thanks

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Anna Sagatelova
Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
6y

You should require the additional person to complete your full application, including running a credit and background check. Assuming they pass your criteria (income shouldn't be an issue if the original tenant qualified alone), you need to create a lease amendment exactly as @Jeff Copeland said.

It shouldn't matter which of them has the utility account in their name, unless you run the background check and see that they have utility accounts delinquent. What matters is that they give you proof that utilities are in one of their names before you give them keys.

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  • Jeff CopelandBusiness Member
    Real Estate Broker · Tampa Bay/St Petersburg, FL · Member since 2015 · 1k+ posts · 2k+ votes
    6y

    This is very common and can be handled with a simple one-page lease addendum to add, delete, or swap out a tenant. 

    The key is to make it clear that all tenants are jointly and severally liable for the lease. This essentially means it's all or nothing - either all of the rent gets paid, or all of the tenants get evicted. 

    You could accept a partial payment from one of the tenants, but this would not necessarily preclude you from evicting them all. 

    How they handle their utility accounts is generally not your concern.

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  • Anna Sagatelova
    Property Manager · Cleveland, OH · Member since 2019 · 446 posts · 566 votes
    6y

    You should require the additional person to complete your full application, including running a credit and background check. Assuming they pass your criteria (income shouldn't be an issue if the original tenant qualified alone), you need to create a lease amendment exactly as @Jeff Copeland said.

    It shouldn't matter which of them has the utility account in their name, unless you run the background check and see that they have utility accounts delinquent. What matters is that they give you proof that utilities are in one of their names before you give them keys.

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  • Sarah Brown
    Real Estate Agent · Nampa, ID · Member since 2017 · 439 posts · 361 votes
    6y

    Have the new person fill out an application.  Qualify her like normal.  Then do an addendum to add her to the lease.  Not a super uncommon occurrence.  Also, make sure she gets renters insurance in her own name. 

    How they split their bills shouldn't matter to you as long as you are getting paid.  You should have a section in your lease that explains if one can't pay, they are both still responsible for the full amount of rent. 

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  • Steve Morris
    Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
    6y

    Usually don't have a problem with room-mates, but they need to be clear that they're JOINT/SEVERABLE liable for the rent.

    That means if A and B are splitting the rent, if B doesn't pay, A owes 100%.

    In addition, the new tenant needs to pass your screen.

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  • Michael Robbins
    Property Manager · Henderson, NV · Member since 2018 · 501 posts · 317 votes
    6y

    It sounds encouraging that the current tenant is at least letting you know that someone else has moved in.  The next step is informing them that the new roommate must qualify.  So the new roommate should complete an application, pay app fee, provide proof of income, and pass your credit check etc... Once complete then execute an addendum to lease and have all roommates sign.  This is important because you do not want any of the leaseholders to think they have been let out of the lease.  

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  • Sohil Shah
    OP
    Real Estate Coach · Charlotte NC · Member since 2019 · 22 posts · 0 votes
    6y

    So from the beginning there were 2 people moving in, only one got approved. But the other party is on the lease stating as "permitted occupants". 

    For the renters insurance should I have them both get there individual on or can they get one insurance policy and both of them?

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  • Anthony Wick
    Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
    6y

    I would say the renters insurance is the least of your problems. That's just so their belongings are covered in case of a disaster, burglary, etc. Now, have these people already moved in? Are the utilities in the renters name? Did they just move in? It kind of sounds like they are trying to pull a fast one on you, and that second tenant would not qualify to be a tenant. I'd do the full background on them and make sure no red flags pop up, such as; prior evictions, felonies, sexual offender registry, etc. No tenants should be adding roommates without the landlords prior written approval. 

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  • Sohil Shah
    OP
    Real Estate Coach · Charlotte NC · Member since 2019 · 22 posts · 0 votes
    6y

    @Anthony Wick

    @Anthony Wick

    @Anthony Wick

    @Anthony Wick@Anthony Wick

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  • John Mocker
    Insurance Agent · Norwalk, CT · Member since 2016 · 2k+ posts · 1k+ votes
    6y
    Sohil The importance of your tenants having renters insurance to them is for their belongings. For you the importance is so they have liability coverage. It is better if they each have a separate policy (each have a separate limit). If they are both named on one policy, that limit is all that is available. However, them having coverage is better than not at all. If they are both on the same policy you could ask for a higher limit. Most Renters policies will go up to $500,000 limit for liability. The cost to increase the limit will generally be less than them each having a separate policy. There are other reasons from their standpoint that they might want separate policies and should speak to their agents.
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