Inevitably a landlord will face the scenario that a roommate will want to move out but the other roommate will want to stay. Many landlords wonder if this constitutes a violation of the lease and what they should do about it.
Many leases we see will either allow a roommate to change if the landlord gives explicit consent; it will allow a tenant to move but they shall remain on the lease as a subletor, or it will prohibit a roommate moving out entirely.
Our lease, for example, states that each tenant individually is wholly and separately responsible for the lease. They can, however, switch out roommates provided that the incoming tenant passes our screening criteria. It also states that we must explicitly authorize this change and will require that the move out and move-in is thoroughly documented.
We do not charge a lease break fee since we do not actually incur a vacancy or do a move out inspection. With that said, though, we have this come up enough that it does take time and energy out of our schedules to accommodate and execute paperwork for this transfer. To overcome this, we recently updated our lease to include a small roommate lease break fee—a nominal amount compared to the typical lease break fee equal to 1.5x the monthly rent.
It is surprising how often we find scenarios of properties we take over that the people on the lease have long since moved out one by one and the new tenants don’t technically have a lease. Even more shocking is that many times the landlords won’t even have the new tenants’ contact details and purely communications through notices posted to the tenants’ door. This is a bad way for us to start out a relationship and is something that when we are representing buyers, sellers, and outside management companies we advocate for an estoppel certificate be signed by the landlord and the tenant that clearly states the accurate tenants, their contact information, security deposit amount, their rental rate, additional rent charges, and any monies that have been paid for future rent, inter alia.
What to do with the security deposit?
We do not like to return any portion of the security deposit when a roommate changes. We tend to favor having the tenants work it out amongst themselves on the deposit. Other landlords will refund a portion of the roommate’s deposit, however, it is very hard to determine if they should get their full deposit back and leads to a host of additional challenges. We don’t claim to have the perfect system, but this is the best solution we have come up with so far.
To recap, make sure your lease is explicit so that you know how to answer your tenants when one requests to move out. Don’t forget to screen incoming tenants and try to stay out of the security deposit reimbursement. Remember—documentation is absolutely essential! Our philosophy is that if we take a hard stance and don’t let roommates change then we run the risk of high turnover in the long run. I’d much rather accommodate the tenants in the short term then constantly having to turn over the unit.