Defining Rental Relationships
The classification of individuals staying in a rental unit affects the business of property management. Classification of rental relationships determines the rights and responsibilities, and protections afforded those individuals by law. Failing to properly address trental relationships can create liabilities for the landlord.
There are three different types of interactions that can occur between a landlord and an individual regarding rental housing. The landlord may interface with a tenant, an occupant, and a guest. The only legal rental relationship is between the landlord and a tenant.
Tenants
The landlord-tenant relationship is a contractual relationship with specified rights and responsibilities of landlord and tenant by law.
In general, a tenant is an individual who:
- Enters into a binding contract, the lease agreement, with the landlord. The lease could be a written document, an oral agreement, or in certain circumstances a series of actions by the landlord and the individual that evidence acceptance of a landlord tenant relationship.
- For the typical lease agreement, signs a written contract which gives the tenant the right to use the premises for his housing needs for a set period of time in exchange for tenant payment of rent and tenant agreement to lease terms and conditions. The landlord must provide habitable housing including repairs and maintenance, and respect the tenant’s rights by law. Tenant failure to comply with lease terms and conditions can result in legal action by the landlord to evict the tenant from the rental premises.
- Pays rent (money) or delivers something of value to the landlord e.g., payment of other goods and services, which is mutually acceptable to landlord and tenant and is not of an illegal nature.
- By signing the lease agreement, the tenant agrees to financial obligations for rent and responsibility for appropriate care of the rental unit. Tenant has responsibility for lease defaults including lost rent, property damage from misuse and neglect, and failure to comply with rental policies such as policies for guests, pets, nuisance, and property alterations.
- Enjoys legal rights (in most states) of tenant’s right to quiet enjoyment of the premises, safe and sanitary housing according to habitability statutes and other rights conveyed by applicable statutes, laws, or ordinances.
- Is held responsible if an occupant or guest in the rental unit violates the lease agreement’s terms and conditions, including occupant’s or guest’s non-compliance with rental rules and regulations established by the landlord for the property.
- Enjoys property amenities and services provided by the landlord as detailed in the landlord’s lease agreement.
Generally, a landlord should require all adults of legal age wishing to live in the rental unit to sign the lease agreement as tenants. This holds each adult jointly and severally responsible for the lease terms and conditions including financial responsibility for rents, property damage, and other lease defaults.
A rental relationship can exist in a special situation whereby the original tenant subleases the rental unit to another individual as a subtenant. The original tenant becomes the sublessor when he transfers some but not all of his rights to occupy, use, and enjoy the rental premises to a subtenant, the sublessee, on a short term or temporary basis. The original tenant retains the right to retake the premises at a future date.
The subtenant is renting from the original tenant who has now become the subtenant’s landlord. A legal relationship exists between the original tenant and the subtenant.
The subtenant pays rent to the original tenant at the mutually agreeable amount. The original tenant is responsible to landlord for the rent amount per the master lease agreement. The original tenant remains the landlord’s tenant and is responsible to the landlord for actions of the subtenant. In general, the landlord cannot directly deal with the subtenant and must enforce the lease through the original tenant.
Occupants
The interaction between landlord and occupant is according to permissions authorized by the landlord.
In general, an occupant is an individual who:
- Does not have a legal, contractual relationship with the landlord – there is no lease agreement between an occupant and the landlord.
- Lives in the rental unit, either temporarily or permanently, with evidence of personal possessions in the unit or other indications of intent to stay.
- Does not pay rent to the landlord or provide compensation of other means to the landlord in lieu of
- Does not have financial obligations to the landlord for rents, property damage or defaults of other terms and conditions of lease agreement.
- Is not entitled to tenant rights and protections by applicable laws, statutes, and ordinances.
- Is not obligated to give notice for move-out.
- Is not authorized to requests repairs and maintenance for rental unit.
- Is not authorized to make changes to the rental property.
Commonly, occupants are likely to be minor children in the family or a tenant’s dependents who are authorized to live in the rental unit with the landlord’s permission. These authorized occupants will often be listed in the lease agreement as a matter of record and for safety reasons to account for all persons in residence.
Why would a landlord be concerned with occupancy issues? There are valid concerns regarding the number of persons staying in a rental unit. Concerns include regulatory local, state, and federal laws; as well as limitations of property size and characteristics, building and systems limitations, wear and tear, noise, use of utilities if not paid by tenant, and health and safety issues related to overcrowding. While a landlord may, with consideration of all factors including fair housing laws, set occupancy limits, the landlord should have clear understanding of legal compliances and ensure the occupancy policy is defensible for legitimate non-discriminatory business reasons, health, and safety standards.
Unauthorized occupants present a different situation for landlords. The concern for many landlords regarding occupancy issues are the potential problems that an unauthorized occupant can create in liability issues for the landlord. An unauthorized occupant is any adult living in the property without landlord permission. Unauthorized occupants do not have legal rights to be live in the rental unit. An unauthorized occupant is not held legally responsible for lease terms and conditions, landlord rules and regulations, or accountable for property damage. The tenant will be held liable by the lease agreement for lease defaults and damages caused by occupants but it may take legal action by the landlord to recover his losses. Additionally, if the tenant moves out, by lease termination or abandonment, the unauthorized occupant could continue to stay in the unit creating risks and liability for the landlord. The landlord would need to take legal action to remove the occupant from the unit.
Guests
A guest is a person invited onto the rental property by the tenant for occasional visits. The lease agreement should hold the tenant responsible for guest compliance with lease obligations and rental rules while on the rental premises.
Similar to unauthorized occupant issues are potential risk and liability Issues that arise from guests who violate the tenant’s lease terms and conditions. The tenant will be held responsible for the guest’s conduct while on the rental premise, but in actuality the tenant has little control over the guest’s actions. The landlord‘s only recourse for defaults and damages is recovery from the tenant.
Legal Action for Lease Defaults
Classification of individuals staying in the rental unit also determines how a landlord should proceed in taking legal actions to remedy lease defaults. A landlord will need to research appropriate landlord-tenant statutes and ordinances for guidance and compliance in removing an individual from the rental unit. In the case of lease default by a tenant, a landlord must follow legal procedures as established by the court of jurisdiction to re-gain possession of the rental unit and seek judgment for lost rents and damages. In some situations, it may be necessary for the landlord to consult with legal counsel to determine appropriate action.
To avoid problems, a landlord should ensure the lease agreement has clear, detailed language for rental policies and practices addressing the issues of occupancy, use of rental premises, guest policy, and requirements of landlord permission for special circumstances. to allow extended stays by guests. Research of applicable laws by the landlord will be required to make sure the lease and attendant policies and practices are legally compliant. The landlord’s new tenant move-in orientation should review the lease and important policies and make sure the tenant understands the rules and what his tenant obligations are during the tenancy.