Adding a tenant to the lease agreement is not easy. There are several considerations landlords should take into account before they allow another person to occupy their property. Moreover, it’s important to follow due process to avoid potential problems.
Why Should Landlords Add a New Person to an Existing Lease?
Landlords may be tempted to allow a new tenant to move into the property without modifying the existing lease. After all, it’s much faster and a lot less paperwork. But, adding a tenant to the lease is much safer in the long run. That’s because unofficial tenants can introduce unnecessary risks. Modifying the lease or creating a lease addendum and adding a tenant is a much safer option. Here are a few reasons why landlords should consider adding a new tenant to an existing tenancy agreement.
1. Updated Terms and Fees
When landlords add a roommate to the lease, it allows them to update the financials. This means they can update and increase the security deposit, applicable fees, and monthly rent payments. This allows landlords to cover the utility bills that will likely increase due to increased usage. It can also help landlords keep up with the increased maintenance costs.
2. Background Checks
Landlords may trust the old tenant, but that doesn’t mean the new tenant is just as reliable. That’s why we recommend going through the official process of adding a tenant to the lease instead of simply letting someone new move in. It allows the landlord to run a background check and ensure the new tenant meets the usual requirements.
For example, the landlord may not be open to adding someone to a lease with bad credit. Going through the proper procedure will allow them to verify the person’s financial history. The landlord can then deny the application and continue with the existing lease agreement.
3. Responsibilities and Rights
Lease agreements contain both the landlord’s and renter’s rights and responsibilities. Clearly laying these out is the key to fostering a good relationship with the tenant and maintaining order. Adding a tenant to an existing lease or adding a tenant to the lease addendum will ensure the new tenant understands their rights and responsibilities. It also clarifies the relationship between the landlord and the new tenant. Moreover, it helps both parties resolve disagreements as the lease contract terms bind both.
The Process: Adding a Tenant to the Lease
What are the steps to add another person to the lease? Whether the landlord is creating a lease amendment, adding a tenant, or forming a new contract, here are the steps to take to add a new tenant.
1. Get a Written Request
Getting a written request from the tenant is always a good idea. Simply talking to the tenant about it may pressure the landlord, forcing them to decide on the spot. Having a written request will give the landlord time to think clearly and make a wiser choice.
The letter should include who the new person is and why the tenant is making the request. This will allow the landlord to understand exactly what the tenant wants.
2. Verify the Occupancy Limit
Landlords must check any laws relating to local occupancy limits before deciding. Some states may not impose any occupancy limits on rental properties. But, some establish a clear limit or formula. For example, California has a two-plus-one rule that allows two people per bedroom plus one more person in the property.
That said, the landlord must make sure the tenant’s request will not exceed the property’s occupancy limit. Otherwise, they may violate local or state legislation, resulting in potential liability.
3. Get a Complete Rental Application
If the occupancy limit isn’t a problem, the landlord should send the potential tenant an official application form. The potential tenant must complete it and return it by a certain date. This will allow the landlord to review the person’s information and perform a thorough background check.
4. Screen the Potential Tenant
Upon receiving the application, the landlord must screen the new tenant. Screening can include the person’s credit score, eviction history, and criminal record. Moreover, the landlord should contact any previous landlords or other references to ensure the person is trustworthy and meets their housing requirements.
After screening the applicant, the landlord must decide whether to accept or reject the potential tenant. If the landlord chooses to reject the application, they must make sure to notify the applicant of the reason why.
Meanwhile, approved applications will have a different process. In these cases, the landlord can either choose to amend the current lease or create a new lease agreement. Regardless, the landlord must invite the tenant to sign the contract.
6. Final Review
If the landlord approves the application, they must meet with the old and new tenants. The landlord must explain the new terms and ensure they understand any changes in the security deposit or monthly rent. Moreover, the landlord should remind the tenants that they are responsible for paying the rent. Afterward, the landlord should create copies of the signed agreement and send it to all the tenants involved.
7. Obtain the Security Deposit and Rent Payment
Landlords can increase the security deposit and monthly rent when adding a tenant to the lease. This is outlined in the new contract signed by the parties involved. Once signed, the landlord can ask the new tenant to pay the new security deposit. They may also ask for the rent payment for the upcoming month.
New Lease Agreement vs Lease Addendums
Should landlords create a new lease agreement or amend the old one when adding a tenant to the lease? Here’s what you must know about both options.
Amending the Existing Lease
Some landlords may want to modify the existing lease agreement without adding too many changes. In this case, the best option is to add an occupancy addendum. This addendum will include all of the changes that will occur after the new tenant moves in. It states the following:
- All the terms for the new tenant
- Moving in and moving out dates
- Additional security deposit
- Monthly rent
- Who is responsible for the monthly rent
- Whether the agreement is individual or joint
- Special terms and conditions (e.g. usage and payment for parking or utilities)
Creating a New Lease Agreement
If there are a lot of changes the landlord wants to implement, then a new lease agreement may be the better option. This avoids having to create a long list of addendums that may only confuse the parties involved.
The landlord can create a new full-term lease period for both tenants with a new lease. They can also include how much the new rent is, security deposits, and major changes to the terms. But, all parties must still agree to the terms laid out in the new lease agreement. The landlord should clarify the changes, especially to the old tenant, who might think the terms have not changed.
Does It Cost to Add Someone to a Lease?
Adding a tenant to the lease doesn’t cost the landlord much. That’s because landlords can charge a new tenant application fee to cover the cost of screening. They may earn more by increasing the security deposit and monthly rent.
Protection for All Parties
Adding a tenant to the lease can be tricky for the landlord. But it’s always good to follow due process instead of simply allowing a new tenant and using a verbal agreement. Updating the lease or signing a new contract will prevent complications and protect all parties involved.
Adding new tenants to a lease and screening applicants can be hard and time-consuming. But, landlords can outsource these tasks to a property management company. Look through our online directory and find a reliable property management company today!