Roommates Are Okay, Subletting Is Not

We recently had a member ask us about an unusual situation after a tenant moved out. The tenant had given a 30 day notice to vacate. Once the tenant had moved the manager noted excessive damage to the unit. Unfortunately, the manager didn’t send out the disposition of the deposit within the 21 days prompting inquiries about the late return from not one, but two different parties. The original tenant had sublet the unit to another party without the manager’s permission. Both claimed to be entitled to the security deposit.

With the current high rents, shared living has quickly become very appealing to property owners with an extra room and to tenants for a variety of reasons. Many sights have popped up offering sublet units like Airbnb, HomeSuite, Roomoram, Craigslist and On the flip side, it has also become a concern for rental owners who are unaware that their tenant has sublet part, or all, of their unit.

Subletting or having roommates has become popular for a couple of reasons. A property owner, especially someone on a fixed income, can rent a room to offset some of their recurring costs allowing them to remain in their home after retirement or when faced with a change in their financial security. With today’s high rents, tenants can choose units with better locations and amenities that are still affordable when cutting the expenditures in half or in thirds. Where it all goes wrong is when the tenant rents a room or a portion of the property without the owner’s knowledge or consent.

All rental agreements should include a clause that addresses subletting stating the tenant may not rent, assign or sublet all, or any portion of, the property without the owner’s written consent. If violated, the owner should reserve the right to terminate the agreement. This is not to say an owner would discourage roommates. This is to make sure the owner has approved any potential occupants.

With our current high rents more individuals are looking to share housing. It’s not uncommon for two, three or four individuals to rent together. Owners understand that sometimes situations change and while one resident wants to leave the others choose to remain. This is where communication is so important. The roommate leaving needs to give notice in writing of his/her intent to vacate. The tenants remaining should express in writing their desire to stay. Ideally, the remaining tenants find a new prospective roommate and that prospect submits an application for approval from the owner.

Cities with rent control have created additional concerns regarding subletting. Rent control has kept long-term tenants at artificially low rents. Often when the tenant wants to move they are faced with the dilemma of giving up their under market unit that will no longer be available at the low rent should they decide down the road to return to the area. By design this encourages tenants to illegally sublet their units. Not only can they keep their low rent unit, they can rent the unit for much more and make a profit.

It’s important for an owner to know who is living in their property. Tenants must be permitted to open their home to temporary guests. However, a well-written rental agreement should define at what point the temporary guest becomes a permanent resident.