Rental agreement--what am I missing?
September 14, 2024 7:33 PM Subscribe
After a little over a year living alone, I'm planning to rent the second bedroom in my house to an old acquaintance. I've lived with plenty of people before, but always with larger groups in rented houses--this will be my first time creating an agreement with just one other person, in my house that I own. The things I plan to include are below the fold--what else am I not thinking of?
Thanks to all of your help last time I did end up telling my previous roommate to leave, which she did without issue. I've been on my own for all but about a month since then, but now I feel ready to have another person around. Given what happened last time, I want to have have everything in writing this time around.
"Maya," my roommate to be, is someone I've known through shared interests for a little over ten years but am not especially close to. She has steady income. We don't have a shared friend group at this point, so on the off chance things blow up it wouldn't wreck either of our social lives. She is not bringing any pets. We met up recently to talk and seem to be on the same page about relative cleanliness and social expectations. (Light clutter okay, would like to share a meal or watch a movie occasionally as our schedules align but mostly maintain independent lives)
Here is what I plan to include in whatever I write up:
-Rent--the number I'm settling on now is roughly half my mortgage payment. Subject to change if I refinance, but I'm not looking to do that anytime soon. Would give one month's notice in the event of change.
-Utilities-would ask for half of gas and electric. I will cover water and internet in full.
-Something on the order of 10-20 dollars per month for household items we'd both use--think toilet paper, trash bags, dish soap, etc. Does that sound fair/like a good number?
-One month notice before leaving
-Terms of what you can do to the room--I'm absolutely fine if she wants to paint the bedroom, hang anything on the walls, etc. Would just require notice of anything that gets damaged.
-Kitchen appliances--absolutely okay to use my slow cooker, air fryer, rice cooker, and blender (all of these are out on the counter) just clean them after and let me know if anything breaks.
-Repairs-I feel like I should lay out a timeline for how quickly repair things should be addressed, but I'm not sure what this would look like.
-Guests-Give me a heads up if you want to have someone over for multiple nights but otherwise bring who you want around, we're adults here
Are there other major things I should be outlining? Are there wrinkles specific to home ownership that I need to take into consideration?
Thanks to all of your help last time I did end up telling my previous roommate to leave, which she did without issue. I've been on my own for all but about a month since then, but now I feel ready to have another person around. Given what happened last time, I want to have have everything in writing this time around.
"Maya," my roommate to be, is someone I've known through shared interests for a little over ten years but am not especially close to. She has steady income. We don't have a shared friend group at this point, so on the off chance things blow up it wouldn't wreck either of our social lives. She is not bringing any pets. We met up recently to talk and seem to be on the same page about relative cleanliness and social expectations. (Light clutter okay, would like to share a meal or watch a movie occasionally as our schedules align but mostly maintain independent lives)
Here is what I plan to include in whatever I write up:
-Rent--the number I'm settling on now is roughly half my mortgage payment. Subject to change if I refinance, but I'm not looking to do that anytime soon. Would give one month's notice in the event of change.
-Utilities-would ask for half of gas and electric. I will cover water and internet in full.
-Something on the order of 10-20 dollars per month for household items we'd both use--think toilet paper, trash bags, dish soap, etc. Does that sound fair/like a good number?
-One month notice before leaving
-Terms of what you can do to the room--I'm absolutely fine if she wants to paint the bedroom, hang anything on the walls, etc. Would just require notice of anything that gets damaged.
-Kitchen appliances--absolutely okay to use my slow cooker, air fryer, rice cooker, and blender (all of these are out on the counter) just clean them after and let me know if anything breaks.
-Repairs-I feel like I should lay out a timeline for how quickly repair things should be addressed, but I'm not sure what this would look like.
-Guests-Give me a heads up if you want to have someone over for multiple nights but otherwise bring who you want around, we're adults here
Are there other major things I should be outlining? Are there wrinkles specific to home ownership that I need to take into consideration?
As far as "what she does to the room" - what we do for our rental condo is, we put language in our rental agreements to the effect that "you can paint the walls whatever color you want while you're renting, but when you move out, you agree to repaint the walls the same color they were when you moved in". That way, if your tenant (and, acquaintance or otherwise, you're about to enter into a legal agreement and this person is a tenant) decides to paint her space with green and purple stripes or whatever, you're not stuck with a gross paint job to fix when she leaves.
You may also want to think about things like quiet hours, if that's important to you - like "please no loud music/TV after 11PM, use headphones after that time" or whatever time sounds reasonable.
posted by pdb at 8:27 PM on September 14
You may also want to think about things like quiet hours, if that's important to you - like "please no loud music/TV after 11PM, use headphones after that time" or whatever time sounds reasonable.
posted by pdb at 8:27 PM on September 14
I think you want to have a limit on how many nights a guest can stay (in a row and per month) Otherwise you could end up with an extra tenant without meaning to do so (legally as well as socially).
posted by metahawk at 8:35 PM on September 14 [6 favorites]
posted by metahawk at 8:35 PM on September 14 [6 favorites]
Your state or county or city landlord/realtor org probably has boiler plate rental contracts that include everything legal (and nothing illegal). They tend to have blanks for all the $/time spits for you to fill in.
If you want to add some sort of addendum to the lease that includes personal habits, OK, but get all the other stuff correct and legal.
posted by atomicstone at 8:52 PM on September 14
If you want to add some sort of addendum to the lease that includes personal habits, OK, but get all the other stuff correct and legal.
posted by atomicstone at 8:52 PM on September 14
Piggybacking on praemunire's comment, there are a couple different ways to structure things. One is like they mentioned, where it's sort of equal-ish feeling roommates, and shared space in the household. (This seems to be the case when roommates equally choose and rent a place together, or go in together to purchase a home.)
It's also relatively common, at least where I am, where they're renting their ROOM, have a set aside amount of fridge space, bathroom space, a cupboard or part of one in the kitchen, and possibly storage or garage area, but don't decorate, furnish, or otherwise take ownership of the shared-ish spaces. It's more like, they're welcome to use them, but they're not in control of those areas. (In general, this seems to be much more common in my area, because generally there is a homeowner who is renting out a room/rooms in the home they live in. It'd be kind of ridiculous if say, random living room furniture was getting moved in and out with roommates.)
There's a difference between "roommates" and renting out a room in an "owner-occupied property", and different laws can apply. (Specifically, laws regarding discrimination are often different - as in, it's often permissible to choose to rent only to those of specific gender and age, and even to advertise such, along with limited the number of tenants.) What you describe seems to correlate with both my second description and owner-occupied property.
I strongly suggest you contact your local organization, whatever it may be, for more info about landlord-tenant law in your area, for guidance specific to your needs.
posted by stormyteal at 8:58 PM on September 14 [3 favorites]
It's also relatively common, at least where I am, where they're renting their ROOM, have a set aside amount of fridge space, bathroom space, a cupboard or part of one in the kitchen, and possibly storage or garage area, but don't decorate, furnish, or otherwise take ownership of the shared-ish spaces. It's more like, they're welcome to use them, but they're not in control of those areas. (In general, this seems to be much more common in my area, because generally there is a homeowner who is renting out a room/rooms in the home they live in. It'd be kind of ridiculous if say, random living room furniture was getting moved in and out with roommates.)
There's a difference between "roommates" and renting out a room in an "owner-occupied property", and different laws can apply. (Specifically, laws regarding discrimination are often different - as in, it's often permissible to choose to rent only to those of specific gender and age, and even to advertise such, along with limited the number of tenants.) What you describe seems to correlate with both my second description and owner-occupied property.
I strongly suggest you contact your local organization, whatever it may be, for more info about landlord-tenant law in your area, for guidance specific to your needs.
posted by stormyteal at 8:58 PM on September 14 [3 favorites]
In my state and many others, the most important thing would be structuring the agreement so Maya fit the definition of a lodger and would not obtain tenancy. Such agreements were commonplace here after wildfire destroyed half our housing. But this distinction may not exist where you are. You should consult an attorney familiar with tenant protections in your city and state.
You should consult your insurer as well to make sure you're not personally on the hook if something like a burst pipe damages your renter's personal property. This may involve a significant hike in your premium.
And you should consult a tax professional in your state regarding what expenses are deductible for a rental property you also live in and regarding whether an arrangement such as Maya directly paying the gas and electric utilities in alternate months counts as taxable income for you.
I have a second-hand familiarity with the pitfalls, thanks to close friends who had similar arrangements for a few years. Enough to not get into such an arrangement myself. There's surely more that I'm missing as well. This is not like a shared house with coequal lessees, nor like a junior ADU with its own entrance. Example contracts I am finding do not precisely apply. Tread carefully, and good luck.
posted by backwoods at 4:29 AM on September 15 [2 favorites]
You should consult your insurer as well to make sure you're not personally on the hook if something like a burst pipe damages your renter's personal property. This may involve a significant hike in your premium.
And you should consult a tax professional in your state regarding what expenses are deductible for a rental property you also live in and regarding whether an arrangement such as Maya directly paying the gas and electric utilities in alternate months counts as taxable income for you.
I have a second-hand familiarity with the pitfalls, thanks to close friends who had similar arrangements for a few years. Enough to not get into such an arrangement myself. There's surely more that I'm missing as well. This is not like a shared house with coequal lessees, nor like a junior ADU with its own entrance. Example contracts I am finding do not precisely apply. Tread carefully, and good luck.
posted by backwoods at 4:29 AM on September 15 [2 favorites]
Best answer: I would not link her rent to your mortgage payments. Your financing incl. interest is your problem, not Maya’s. Figure out what the going rate for a lodger or shared home (as may be applicable) is in your area and pitch it at that level or a bit below. Include a fixed term and how frequently the rent is up for review.
You may also want to include a deposit of sorts, whatever is normal in your jurisdiction. That ensures you have money to repaint the room if Maya paints it dark red and fails to paint it back to the original colour on leaving…or does such a shitty job that you have to do it again or destroys the floor or whatever.
Talk to your insurance about what kind of damage they cover for non relatives that are living in the home.
And yes, figure out how this income will be treated for your personal taxes. That includes figuring out how income is even computed, expenses you can offset etc.
My rationale for all of that would be that you need to think of this as a business transaction.
posted by koahiatamadl at 5:35 AM on September 15 [6 favorites]
You may also want to include a deposit of sorts, whatever is normal in your jurisdiction. That ensures you have money to repaint the room if Maya paints it dark red and fails to paint it back to the original colour on leaving…or does such a shitty job that you have to do it again or destroys the floor or whatever.
Talk to your insurance about what kind of damage they cover for non relatives that are living in the home.
And yes, figure out how this income will be treated for your personal taxes. That includes figuring out how income is even computed, expenses you can offset etc.
My rationale for all of that would be that you need to think of this as a business transaction.
posted by koahiatamadl at 5:35 AM on September 15 [6 favorites]
Having lived with an owner landlord - is there anything that requires special cleaning products or could be inadvertently ruined (e.g. granite counters, wood floors). The appropriate timeline to fix things is ASAP, our relationship definitely went downhill when landlord decided not to fix the dishwasher, ever. And just own that it’s your house and you mostly want to do things your way, I found it confusing when LL switched between being super welcoming and flexible and then stern about house rules that weren’t discussed before I moved in. Honestly, I have not seen this setup go well for friends, either, prepare to be your most patient self.
Just add the $10-20 for TP into the rent and buy all the house supplies you want. I would be annoyed with the added administrative burden of another payment of such a small amount, especially since you aren’t super close friends who will be splitting other things. And +1 check that the rent is roughly in line with the market and get the legal side of things sorted.
posted by momus_window at 6:37 AM on September 15 [9 favorites]
Just add the $10-20 for TP into the rent and buy all the house supplies you want. I would be annoyed with the added administrative burden of another payment of such a small amount, especially since you aren’t super close friends who will be splitting other things. And +1 check that the rent is roughly in line with the market and get the legal side of things sorted.
posted by momus_window at 6:37 AM on September 15 [9 favorites]
Best answer: A few thoughts, as someone who has been both a landlord and a tenant:
(i) I don't think it makes any sense to peg the rent to half your mortgage. Your tenant is not on your mortgage, and has specifically nothing to do with your mortgage - she is not gaining any equity in the house through her rent, so tying the amount she pays to your mortgage is confusing, unhelpful, and maybe a bit insulting, in my opinion. I would do some research about rent in your area, and set the rent at market or somewhat below, depending on what you envision. You can look on Hotpads, Craigslist, Zillow Rentals, etc. to get a sense of what is being charged for what kind of space. Personally, I would include the household items into the rent so she doesn't feel nickled-and-dimed, but it's your call.
(ii) I think you need to more clearly define the arrangement that you're proposing. In my experience, this kind of landlord-rents-out-room arrangement can get particularly sticky, and rarely goes well. The landlord often thinks that this is their house and assumes that they get primary say and veto power over most things; the tenant often feels that they are treated as a second-class citizen in their own space that they are paying for. I rented from a live-in homeowner before and had that exact experience. She was lovely, but I felt like I was living in someone else's house. If I got up from the couch, she would come over and straighten the pillows on the couch. She would move my stuff in the fridge around to give her things priority. Sometimes she would throw my stuff out if she felt like it had been in the fridge too long. She didn't want any of my things left out in any common spaces. If I did laundry "too often", she would bring it up. She would bring up the length of showers that she felt were too long, or any lights that were left on (sometimes she blamed me for things that I think she actually was responsible for - like leaving a light on). If I wanted to cook and she was having friends over for the evening, I couldn't use the kitchen - and with no notice. She only wanted very specific cleaning products used, and her level of cleanliness took priority. She expected me to spend 3-4 hours per weekend cleaning the house, in very particular ways with particular products. I resented this because the arrangement felt like I was deprioritized from common spaces and could reliably only hang out in my bedroom (see above), but was expected to keep the whole house up with her. There was also a situation where a plumber had to come for a clogged shower in my bathroom, and she wanted me to pay the very expensive bill (or at least half). I had only been there a few weeks and felt that there was no way that my hair could have clogged it in that time, especially as I was making efforts to dispose of the hair not via the drain. I was getting below-market rent, which initially felt like a really good deal, but by the end I felt that I was paying substantially too much for what I was getting.
I recount all of this in detail to make clear what this kind of arrangement can look like in practice. The above can be okay - if your tenant agrees to it. Obviously the rent should be substantially lower in this case - i.e., if she's just renting a bedroom, with access to the common spaces deprioritized relative to you. You could look at comps for renting just a bedroom, and then going maybe half of that in rent because most of those scenarios are welcoming someone into a non-homeowner houseshare where the occupant will have full say/priority. The alternative is for you to treat the situation as if you both rented the house together, and actually have equal say and priority. Then you could charge more, although I wouldn't go up to half of a four-bedroom house because it sounds like she wouldn't have chosen to rent something so big on her own. Perhaps in that scenario it would be half of a two-bed apartment as a fair rent. I also think splitting ALL utilities (except maybe internet) should be added to the rent. This is for her benefit: if you're paying the full amount of one utility (e.g., water), it's easy to feel controlling about how much someone else is using. Again, though, perhaps her share of something like heating/cooling should be lower because she presumably wouldn't have chosen to rent such a big house with only one other person if the choice were up to her.
(iii) Following on from the above: you really should both sign a lease. You can probably get a free lease template from your state's realtor association, and then you just fill in the relevant blanks. Might be worth adding an addendum for anything else. My experience is that things can and do easily go south in arrangements like this that are partly business and partly friendship. It's just much easier to navigate something that is either strictly business, or almost strictly personal (say, a romantic partner, where sex and love smooth over a lot of domestic friction). A lease clarifies expectations up front, which is helpful in and of itself, and also protects both of you in case things don't go well.
(iv): The arrangement I would thus propose is:
Your tenant pays market rate or somewhat below: you clearly decide first whether she's a complete equal or whether she's renting a bedroom in your house, set the rent to reflect that, and make the set-up clear to her. You split (equally or not) utilities that are charged by usage (so, perhaps everything but internet). You obviously are responsible for taxes, large maintenance bills that are no one's fault (hot water heater, roof, furnace, etc.). You talk through various of the scenarios I mentioned above to make sure you agree about:
- Who pays if she breaks one of your things (e.g., dishes, your expensive Kitchenaid mixer, etc.)
- What if something fails and it's in part her fault (e.g., a $500 plumber bill for a toilet or shower clog )
- Agreed thermostat temperatures during different times of the year
- Noise levels and quiet hours
- Responsibility for exterior maintenance (lawn, etc.)
- Use of common space: equal rights to the common space or do you have priority? What happens if you both want to use the kitchen or living room or yard at the same time? If you have equal priority to common space - can someone call dibs in advance or is it first-come-first-served
- Whether pets will be allowed (I know you said your tenant won't be bringing one, but things can change - I had a tenant who came without a pet and then wanted one)
- Cleanliness standards and who is responsible for upholding them, and how it will work practically (tasks split and each person has agency over when the task is done, everyone cleans together at x time on y day, etc.?)
- Who pays for household items, and what quality will they be (standard TP or soft, etc.)
- Required notice from either party to break the arrangement
- How to resolve conflict/disagreement about any of the above
posted by ClaireBear at 9:39 AM on September 15 [4 favorites]
(i) I don't think it makes any sense to peg the rent to half your mortgage. Your tenant is not on your mortgage, and has specifically nothing to do with your mortgage - she is not gaining any equity in the house through her rent, so tying the amount she pays to your mortgage is confusing, unhelpful, and maybe a bit insulting, in my opinion. I would do some research about rent in your area, and set the rent at market or somewhat below, depending on what you envision. You can look on Hotpads, Craigslist, Zillow Rentals, etc. to get a sense of what is being charged for what kind of space. Personally, I would include the household items into the rent so she doesn't feel nickled-and-dimed, but it's your call.
(ii) I think you need to more clearly define the arrangement that you're proposing. In my experience, this kind of landlord-rents-out-room arrangement can get particularly sticky, and rarely goes well. The landlord often thinks that this is their house and assumes that they get primary say and veto power over most things; the tenant often feels that they are treated as a second-class citizen in their own space that they are paying for. I rented from a live-in homeowner before and had that exact experience. She was lovely, but I felt like I was living in someone else's house. If I got up from the couch, she would come over and straighten the pillows on the couch. She would move my stuff in the fridge around to give her things priority. Sometimes she would throw my stuff out if she felt like it had been in the fridge too long. She didn't want any of my things left out in any common spaces. If I did laundry "too often", she would bring it up. She would bring up the length of showers that she felt were too long, or any lights that were left on (sometimes she blamed me for things that I think she actually was responsible for - like leaving a light on). If I wanted to cook and she was having friends over for the evening, I couldn't use the kitchen - and with no notice. She only wanted very specific cleaning products used, and her level of cleanliness took priority. She expected me to spend 3-4 hours per weekend cleaning the house, in very particular ways with particular products. I resented this because the arrangement felt like I was deprioritized from common spaces and could reliably only hang out in my bedroom (see above), but was expected to keep the whole house up with her. There was also a situation where a plumber had to come for a clogged shower in my bathroom, and she wanted me to pay the very expensive bill (or at least half). I had only been there a few weeks and felt that there was no way that my hair could have clogged it in that time, especially as I was making efforts to dispose of the hair not via the drain. I was getting below-market rent, which initially felt like a really good deal, but by the end I felt that I was paying substantially too much for what I was getting.
I recount all of this in detail to make clear what this kind of arrangement can look like in practice. The above can be okay - if your tenant agrees to it. Obviously the rent should be substantially lower in this case - i.e., if she's just renting a bedroom, with access to the common spaces deprioritized relative to you. You could look at comps for renting just a bedroom, and then going maybe half of that in rent because most of those scenarios are welcoming someone into a non-homeowner houseshare where the occupant will have full say/priority. The alternative is for you to treat the situation as if you both rented the house together, and actually have equal say and priority. Then you could charge more, although I wouldn't go up to half of a four-bedroom house because it sounds like she wouldn't have chosen to rent something so big on her own. Perhaps in that scenario it would be half of a two-bed apartment as a fair rent. I also think splitting ALL utilities (except maybe internet) should be added to the rent. This is for her benefit: if you're paying the full amount of one utility (e.g., water), it's easy to feel controlling about how much someone else is using. Again, though, perhaps her share of something like heating/cooling should be lower because she presumably wouldn't have chosen to rent such a big house with only one other person if the choice were up to her.
(iii) Following on from the above: you really should both sign a lease. You can probably get a free lease template from your state's realtor association, and then you just fill in the relevant blanks. Might be worth adding an addendum for anything else. My experience is that things can and do easily go south in arrangements like this that are partly business and partly friendship. It's just much easier to navigate something that is either strictly business, or almost strictly personal (say, a romantic partner, where sex and love smooth over a lot of domestic friction). A lease clarifies expectations up front, which is helpful in and of itself, and also protects both of you in case things don't go well.
(iv): The arrangement I would thus propose is:
Your tenant pays market rate or somewhat below: you clearly decide first whether she's a complete equal or whether she's renting a bedroom in your house, set the rent to reflect that, and make the set-up clear to her. You split (equally or not) utilities that are charged by usage (so, perhaps everything but internet). You obviously are responsible for taxes, large maintenance bills that are no one's fault (hot water heater, roof, furnace, etc.). You talk through various of the scenarios I mentioned above to make sure you agree about:
- Who pays if she breaks one of your things (e.g., dishes, your expensive Kitchenaid mixer, etc.)
- What if something fails and it's in part her fault (e.g., a $500 plumber bill for a toilet or shower clog )
- Agreed thermostat temperatures during different times of the year
- Noise levels and quiet hours
- Responsibility for exterior maintenance (lawn, etc.)
- Use of common space: equal rights to the common space or do you have priority? What happens if you both want to use the kitchen or living room or yard at the same time? If you have equal priority to common space - can someone call dibs in advance or is it first-come-first-served
- Whether pets will be allowed (I know you said your tenant won't be bringing one, but things can change - I had a tenant who came without a pet and then wanted one)
- Cleanliness standards and who is responsible for upholding them, and how it will work practically (tasks split and each person has agency over when the task is done, everyone cleans together at x time on y day, etc.?)
- Who pays for household items, and what quality will they be (standard TP or soft, etc.)
- Required notice from either party to break the arrangement
- How to resolve conflict/disagreement about any of the above
posted by ClaireBear at 9:39 AM on September 15 [4 favorites]
Response by poster: Thanks for the reality check on looking into the legal and tax implications, these are exactly the kind of answers I was looking for! I’ll also look for a local lease agreement template to use at least as a jumping off point.
I should also add that I have been a roommate/tenant in a home with a live-in owner who I’ve stayed in contact with, so I know what this can look like from the renter’s side for better and worse. Staying at my old house recently, I was profoundly struck by how my old landlord’s belongings take up so much physical and metaphorical space that there is no room for anyone else to have anything outside of their bedroom. That is not what I want. I realize that being the homeowner/landlord puts me in a position of power, but I don’t want Maya to have to hide away from the downstairs spaces. And yes I do have a lot of kitchen appliances, but I also have a lot of counter and cupboard space, so we can probably figure out the arrangements.
posted by ActionPopulated at 7:54 PM on September 15 [1 favorite]
I should also add that I have been a roommate/tenant in a home with a live-in owner who I’ve stayed in contact with, so I know what this can look like from the renter’s side for better and worse. Staying at my old house recently, I was profoundly struck by how my old landlord’s belongings take up so much physical and metaphorical space that there is no room for anyone else to have anything outside of their bedroom. That is not what I want. I realize that being the homeowner/landlord puts me in a position of power, but I don’t want Maya to have to hide away from the downstairs spaces. And yes I do have a lot of kitchen appliances, but I also have a lot of counter and cupboard space, so we can probably figure out the arrangements.
posted by ActionPopulated at 7:54 PM on September 15 [1 favorite]
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It sounds like you are still thinking of the house that is not the individual rented bedroom as "yours," which is a little different from the more standard U.S. roommate expectations that the non-bedroom spaces are common spaces that, for example, could be decorated by any roommate. That's fine, but it should be made clear to her, as well. (E.g., it sounds like you have a lot of kitchen appliances already...if you're not going to let her have half the space for her own kitchen stuff, she should know that in advance.)
posted by praemunire at 7:50 PM on September 14 [3 favorites]