When two or more people sign a lease or rental agreement together, they become co-tenants and share the same legal rights and responsibilities. Many leases contain language stating something to the effect of "tenants are jointly and severally liable for paying rent and adhering to the terms of the agreement." This means that each roommate is independently responsible for the entire rent – not just his or her share of the payment. In other words, if one roommate does not contribute to any month's rent, the other roommate(s) are still liable for the entire payment. A landlord has the legal right to hold all co-tenants responsible for the negative actions of one, and he or she can evict all tenants even if only one violated the lease or rental agreement.
Most landlords will require tenants to sign a written lease –a conveyance of a possessory estate in real property and a contract between the landlord and tenant. There are three different types of residential leases that express various terms for the rental agreement: tenancy for years, tenancy from period to period and tenancy at will. Each lease identifies a starting date for the tenancy and, depending on the type of lease, an end date may or may not be specified. A fourth type of lease – a tenancy at sufferance – is not ever intentionally entered into (lease types are covered in more detail in the "Types of Leases" section of this tutorial).
If a renter wishes to add a roommate to the lease or rental agreement, the landlord will perform the usual credit and reference checks for any additional tenants and will ask all tenants to sign a new lease or rental agreement. Because tenants are "jointly and severally liable" for paying the rent and any damages, the landlord will benefit from including all tenants on a new lease. The new lease also makes it clear to all tenants that each shares the same legal rights and responsibilities.
Adding a roommate to a lease might result in an increase in rent, presumably to cover the additional wear and tear on the unit. The new lease signifies a new tenancy, so the landlord can increase the rent immediately (instead of giving any notice or waiting until the lease ends). The landlord also has a legal right to increase the security deposit on the unit. The amount of the security deposit is typically based on the rent. If the rent increases, the landlord can raise the security deposit correspondingly.
Finding a Suitable Roommate
If a renter has decided for financial or social reasons to find a roommate, great care must be taken to find one that has similar housing goals. Renters must decide if they are interested in a quiet home life, loud music and parties, or something in between. Regardless of lifestyle, it is important that all roommates share common goals; otherwise, the living situation can quickly turn bad.
Renters can find roommates by word of mouth, campus newspapers or by searching a variety of online roommate matching services. A quick Google search for "rental roommate" brings up a number of these websites. It may be easier to find a compatible roommate if each party asks questions: When should stereos be turned off? How will cooking and food shopping be delegated? Who will write the checks for rent and utilities? Is it okay for girlfriends or boyfriends to spend the night and, if so, how often? How will rent be divided? Who will get which bedroom?
It is also appropriate to ask where the rent money will come from. Is the potential roommate employed? If they are a student, will they have their parents' help with rent and expenses?
Determining "exit procedures" is also helpful. How much notice will roommates give one another before moving out? For how long will they continue to pay rent? Will the roommate be responsible for finding a replacement?
Addressing and answering these questions ahead of time can help create a more satisfying experience for all of the roommates. For added peace of mind, roommates can enter into a "Roommate Agreement" that defines the terms of the co-tenancy and outlines details such as each person's share of the rent and utilities, who gets which bedroom, how will chores be divided, how food and shopping will be handled, rules regarding guests and plans for dispute resolution.
Sharing the Rent
The rent can be divided equally amongst the co-tenants or different factors can be used to determine a fair percentage for each person. It is not uncommon, for example, for the tenant with the largest bedroom and private bathroom to pay a higher share of the rent. Similarly, if one tenant otherwise takes up more space in the property – perhaps by commandeering the office space or the garage– he or she will likely be responsible for a greater share of the rent. The landlord's only concern is that the total rent is paid on time each month. The co-tenants are free to divide the rent as they see fit.
At times, roommates may find it is appropriate to divide the utilities based on usage. One roommate, for example, may not watch any television programs. The roommates may decide that person will not have to contribute to the cable bill. Likewise, one tenant might use much more electricity than the average person. That person might pay an additional amount each month to reflect the extra usage. Disagreements can be avoided if the tenants decide ahead of time how to handle the rent and utilities.
Even though the landlord will be responsible for the majority of maintenance inside the unit and the common areas, the tenants are still in charge of normal household chores such as cleaning the bathrooms, vacuuming/sweeping/mopping the floors, cleaning the kitchen, and taking out the garbage and recycling. Without a schedule, it is easy for one roommate to end up doing the majority of chores. Before signing a lease together, roommates can create a list of daily, weekly and monthly chores, and identify who will complete each task and when. It can be helpful to have a chart hanging in an obvious location, such as on the refrigerator, where each roommate can check off the jobs that have been done and see which ones have yet to be completed.
SEE: How A Bad Roommate Can Ruin Your Credit Score
Personal FinanceLiving with someone can cut your expenses, but in addition to not doing the dishes, your roommate may do serious damage to your credit.
Personal FinanceChoosing the right roommate is key to not risking and ruining your credit history. Some simple precautions can save you from a financial nightmare.
Financial AdvisorAlthough renting by the room can increase returns on rental property, it does come with a few caveats.
Managing WealthEverything you need to know before you rent a home.
InvestingIf you're renting an apartment this year, beware of signing contracts with these tricky clauses.
InvestingKnowing the main points of a lease will make sure you don't sign - and end up paying for - something you don't want.
InvestingA modified gross lease is a rental agreement where, in addition to their rent, tenants pay a share of other costs associated with the property.
Managing WealthWhether you're a landlord or a tenant, you need to know the rules.