When a lease agreement is already signed an in effect, it’s pretty difficult to change the terms around. If you or your tenant wants to add a new tenant to the lease, here is how to go about it.
Talk to Your Tenant
If the tenant approaches you and asks to add a roommate to their lease, then they should probably provide you with an official, written request. Usually, the tenant will be asked to add a friend or family member to the lease. Remember that the individuals who are on the lease are responsible for your rental property on multiple levels (rent, deposits, damages, utilities, etc.). This means that the person they are requesting to add to the lease must meet your qualifications for the ideal tenant.
No matter how your tenant may feel about their potential roommate, it’s important that you go through the proper screening process and make a decision for yourself. If there are other tenants in the unit, you must also consult with them before making a decision. Everyone involved in the lease must be in full agreement of the request. Remember to consider occupancy levels in your local jurisdiction as well. If you decide to reject the roommate request, send a written notification to your tenant that explains why the request has been denied.
If there is a vacancy in your rental unit, and you already have a roommate-matching service (as is common in student living rentals, for instance), then write a notice to your tenant about adding a roommate to the unit. Always be sure to refer to your lease terms and state laws to ensure you are within your rights as a landlord.
Acquire a Completed Rental Application
Once you have spoken to your tenant about the situation, provide the potential roommate with a rental application and require it be returned by a certain date. All prospective tenants must complete a rental application so you can screen them properly by conducting a background check, contacting references, and obtaining a credit report. This information will help you make the final decision of adding the new tenant or not. Screening potential tenants is one of the most important steps in adding a new tenant to your lease.
Make a Decision
Once you have thoroughly screened the prospective tenant, it is time to make your final decision. If you decide to reject a current tenant’s request for a new roommate, make sure you send them a written explanation of the denial. You must also contact the individual you screened and let them know you have not accepted their rental application.
On the other hand, if you decide to go through with adding a new tenant to the lease, you must draw up a new lease agreement. The lease is typically exactly like the existing one, and this part is more of a formality, but if officiates the addition of a new tenant. Make copies of the “new” lease agreement and have the new tenant and existing tenants sign it. If you don’t want to have them sign an entire lease, you can write a lease amendment for your existing tenants and have them sign that instead.
Review the Details
After you’ve gone through all of the paperwork, you should sit down with your tenants and go over all of the details. Make sure the new tenant is aware of security deposit obligations, the required rent amount, and rent payment due dates. All tenants are responsible for the entire rent amount even if someone isn’t paying their portion. Review the terms of the lease agreement so the tenant has a detailed understanding of their rights and the rules and policies of the property. Remember to make copies of the lease agreement and provide all tenants with one. This way you know that everyone is up-to-date on the rental unit’s regulations.
Benefits of Adding a Roommate to the Lease
More tenants mean more rent since the addition of a new tenant would warrant a rent increase. In theory, more tenants also mean an increased risk for damages, wear and tear, and nuisances. When you add a new tenant to a lease, you’re essentially implementing a brand new lease that allows you to make slight changes to the tenancy. In other words, you’ll be able to increase the rent without having to give the regular 30-day notice.
Unless your rental unit is covered by rent control, you are allowed to increase the rent to an amount that is reasonable for the current housing market. Keep Fair Housing laws in mind, since unfairly increasing your tenant’s rent could be considered discrimination.
As a landlord, you also have the power to increase the security deposit amount. Your new tenant will be paying this security deposit in full and your existing tenant will pay the difference. Keep in mind that security deposits are usually limited by your state, so you cannot increase the security deposit past this amount. The limit is typically a multiple of the monthly rent (often twice the monthly rent). If the deposit is already at the maximum, but you raise the rent for the new occupant, then the maximum security deposit goes up too.
Tenant Addition Addendum
A great way to streamline the process of adding a new tenant to the lease is by adding an addendum for it. You can find templates online or make your own; here is a good example.
When adding a new tenant to the lease, it’s important that you keep certain variables in mind. More tenants do mean more money, but they also mean more risk.