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13 Sep 2011

Multiple Tenants on the Lease Agreement

I hope I never deal with a sticky situation of multiple tenants on the lease agreement. When it comes to one of the tenants leaving, it can get very ugly. It reminded me of why I never had a roommate.

I was away from town when my new apartment was on the market. I hired my best friend to show it. This friend of mine is very much like me. If I wouldn't be the one who gets a perfect tenant for my newly remodeled duplex, she would. She showed a few prospective tenants and liked three young professional girls. They were going to share this three bedroom. She liked them a lot, and I did too. After doing the screening, that was it, my girls moved in. All three were having entry level office jobs. But I really didn't mind as they were sharing among themselves and together could afford the place.

Joint Tenant Lease
They signed a lease (one signed and two were just declared to be sharing the space) but I treated them as "a tenant" combined. I dealt with a deposit from one source and monthly rental from one source. One of them was the main contact but they all signed the contract as some "living with tenant" people. these tenants were a dream to work with until roommate X wanted out before the end of the term. I know better than keeping people because of the contract term. The question was more about the other two tenants. That was not my responsibility but I had to jump in to help out so that we get everyone happy.

Her original email goes:
Hi me
This is to inform you that i will be moving out 30 April

This is to hand in my 30 day notice as I have to unfortunately  move back home due to unforeseen circumstances
There is a person interested in taking over the room but I am not sure how serious they are

I will have to ask that we also eliminate my name from the contract as I will no longer be living at the apartment

Another reason for handing  the notice in is in case the person interested in the room does not come to the table; how would we work the deposit money situation

I have enjoyed having you as our landlord and is with total sadness that I have to unfortunately leave.

The other 2 girls will still be staying in the apartment.
Not only was I losing great tenants, I was also struggling to get a way to really handle this. I never wanted to do the joint rental, but tenant X was under the impression that, they were in joint lease. I had to point her at the contract and suggested that they all serve the notice and the two tenants Y and Z re-apply with the new tenant A. I hate tempering with the contract.

She off course naively decided to give her rights to the new tenant A, and stay in the contract. At this point I wanted to rather lose these girls than take on a new one. At the end we took the new tenant A, amended the contract to remove tenant X and added tenant A. All I was thinking about, was setting a bad precedence. What to do if this happens again. And indeed, only four months later, the other tenant, tenant Y wants out. I was not going to entertain anymore drama, I decided to deal with a vacancy instead. 



What I've learned from this is:
  • I am not interested to know who stays with whom, I only deal with my one tenant and I know the number of occupants, and I monitor that,
  • I stick to the terms of the lease agreement, no bending of rules to accommodate the tenant, unless absolutely necessary and legal,
  • Never to entertain multiple tenants for one place.

Its always sad losing the best tenants but I suspect my one applicant will be my new favorite tenant. I am curious to know if other small landlords do sign on multiple tenants on the lease agreement. There has to be an easy way to handle it. I choose to stay out of it for now.

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