Rented my unit to unrelated tenants, now one is moving out….
Question 1
One of my units has been rented to two unrelated tenants. Due to change in employment for one of them, One is moving out and the remaining says she will assume responsibility for the apartment. Is there a certain form that needs to be used here or is a verbal agreement enough?
Answer 1
Oral agreements are often worth the paper they are written on — nothing. Everything to do with landlording should be in writing.
If the remaining tenant financially qualifies to rent the unit, you can, if you wish, release the departing tenant from the lease. However, there is usually no reason to consider releasing the departing tenant from liability. Your lease should have and likely did make all signers jointly and severally liable and you are much better off to keep it that way. For example, if you release the one moving out and the remaining tenant never pays rent again, you will not be able to go after the other one. If the remaining tenant filed bankruptcy, you would have nothing.
The bottom line is that it is to your advantage to leave the departing tenant liable. If nothing else, he/she might pressure the remaining tenant to make good on damages or unpaid rents.
Similarly, you should not refund any security deposit to the departing tenant, but, for several reasons, should require the two tenants to take care of that between them, obtaining an assignment of the departing tenant’s share of the deposit to the remaining tenant or when the remaining tenant also leaves, make the check for any funds being returned payable to both parties.
Question 2
I’m taking over management of some property here in TX and was wondering how I should go about forcing a tenant to sign the new company lease. I know you can’t change the monthly rent they are paying, but I want to put the tenants on our lease with our policies. I would say 90 % of our tenants will not give a fuss, but a few just might. I would imagine that, since the old owner is no longer in the picture, technically they no longer have an actual lease and must sign with our company.
Answer 2
You don’t say whether you are taking over management as a licensed broker or as an employee of the owner or of a licensed broker. Most states require that a property manager be licensed real estate broker, however, most states allow an unlicensed person to be resident manager for the particular property in which he/she resides as long as the resident manager is a legal employee of the owner or a licensed management company.
You are absolutely wrong regarding what a sale means related to a lease agreement. Lease agreements go with the property, not the owner. This would be true even for an oral lease, such being valid and enforceable for a term of up to one year in most, maybe all states. Any lease in effect at the time of purchase of a property is valid until expiration and the new owner cannot force a tenant to execute a new lease and cannot unilaterally change its terms in any way except as allowed by terns of the existing lease. Obviously, however, if it is a month-to-month tenancy, a new lease or any other changes can be made upon providing proper advance notice as required by your state’s law. However, one still cannot force a tenant to sign, as the tenant could instead leave.
Question 3
I have an applicant that does not wish to give her social security number. She states that this is not needed to allow a person to obtain a place to live and is against the law to be denied based on bad credit. Is this true? If so, what can one use to verify if this person is who she says she is, plus what guideline can be used for a landlord to deny renting to an applicant?
Answer 3
The applicant is wrong. A landlord can refuse to rent to a person who does not qualify to rent a property under such financial criteria that the landlord applies to all applicants. If you normally perform screening procedures that require applicants to provide Social Security Numbers, you can refuse to even consider an application from someone who refuses to provide the information requested on your application form, so long as the requesting info does not violate federal, state, or local law. SSNs can be requested from each adult applicant. In fact, failure to apply all qualifying criteria to all applicants can put a landlord at risk of being subject to a fair housing law violation.
It is best to have a written screening policy that you give to each potential applicant, wherein, you state which information will be required and what screening reports will be performed, requiring written permission from the applicant to obtain reports. The policy should state that everyone who will be living at the residence who is 18 years and over must prove identity with two sources of ID, including at least one photo ID, and provide SSN, driver license, vehicle tags and registration information. State that they must authorize you to obtain screening reports including a credit report, employment and income verification, criminal background check, eviction history, and previous landlord checks.
If they refuse to meet reasonable requirements that you apply to all potential applicants you need not consider their application. You must apply the same criteria to all potential applicants in order to withstand any claims of violating fair housing laws. Be sure to document the problem regarding the subject applicant in detail and retain the documentation. Potentially good tenants will cooperate. Beware of the ones who refuse to provide information or authorization.