I will be renting to four students this summer and they are asking me if I can have four separate leases. This way they are not liable for each others actions. I do not know how to respond to this or how to counter their requests. Does anyone have any recommendations for me on how to handle this? What is standard practice for this type of "rent by the room" scenario.
I've also heard from someone that I should establish a "Master Tenant" in case major issues happen...
Don't do it. If they are worried about each other's actions, then you shouldn't be renting to them in the first place. Putting everyone on one lease makes them accountable to each other. Also, if something does break, they can make one person the scapegoat, then it's a he said/she said game as to who is charged for the repairs. Many software programs lets people pay individually which is great, but bottom line the rent needs paid at the beginning of the month. Hope that helps!
Your response should be "No, no, no!" You must explain to them that they are "individually and severally" responsible. That means that if one tenant messes up, the others will have to deal with that mess.
If they don't like that, too bad, DO NOT accept them. This is from my own personal experience, and what I have learned to do. It is not legal advice.
@Eric McCarty doesn't matter, they're all on the lease for the entire lease duration. Let them figure it out.
@Dave Poeppelmeier so one lease for full 2000/month and let them figure it out if someone leaves?
If someone leaves, they have to tell you but the entire group on the lease is still responsible for paying the full rent. I also do not allow subletting. You want to specify that if someone leaves and another person wants to take their place, they need to go through your application process and have the "new" group sign a new lease. It's a lot of hassle, but I feel it protects you if the group doesn't pay as well as making sure you're not letting someone with a violent history, drug use, etc live in the house. It also goes without saying that you should have to parents co-sign on the lease as well.
@Eric McCarty I would say a big no to individual leases for each of your tenants. By signing individual leases, you are putting yourself at greater risk. Your college tenant could skip town or cause significant damage to your property. It is then your responsibility to fill that spot.
With a joint lease, even if one or more tenants leave, it is the responsibility of the remaining tenants to find a replacement or cover the additional rental costs. If one or more tenants cannot pay their rent in a given month, you are still entitled to your payment in full.