June 21, 2012 | By wonkum |
Question: I just recently leased a new condo in a great building with top notch amenities. I’m going to offer the second bedroom to a friend of mine to save on rent. Do you have any advice to avoid a dispute down the road while living with a friend?
Congrats on the new spot! A new home, especially during summertime, is exciting – think of all the rooftop parties and pool parties you and your friend can host. But before you think about all of that… think about putting an agreement in place.
While living with your friend has the promise of a lot of fun, it also can lead to disaster if you don’t take proper precautions. Even if your roommate has been your best friend since kindergarten, the most trusting and loving relationships have deteriorated due to disputes over money and property. Don’t let it happen to you! In this case, you should draft an agreement to govern the monetary relationship you have with your friend.
The good news is that this is simple, and doesn’t have to be something that a lawyer drafts for you. The agreement is best when it uses simple, clear, language that explicitly sets out the responsibilities of the parties. The essential terms of a rental agreement are: (1) the amount of rent being charged and how it is to be paid, (2) the term of the occupancy, and (3) the space being occupied. As long as the subject of your agreement is not illegal or against public policy, you are free to determine the entire course of your relationship via contract. Just make sure your agreement is clear and unambiguous, and therefore plain English is best.
It is totally up to you, and advised, that you document how you will cover and/or split utilities (a shared landline phone, cable, water, garbage, gas/electric, if applicable) and to include other terms, such as penalties for late payment, restrictions on house guests, how you will share chores, how and when a security deposit will be returned, and any other matter that you think is important.
It is also advisable to determine what happens when one roommate wants to terminate the roommate relationship before the lease is up. If both roommates have signed the lease, then both roommates are responsible to the landlord for the rent, but the reality is that the remaining roommate gets stuck with the debt because the consequence of not paying the rent – eviction – only concerns the remaining roommate. In such a situation, what is the obligation of the departing roommate to the remaining roommate?
If only one party’s name is on the lease, and I see that you note that you leased the new condo (not you and your friend), that party may be relying on their roommate’s share of rent in order to make ends meet; if the roommate moves out before the lease is up, this leaves the tenant of record solely responsible. One equitable way to deal with this would be to allow the departing roommate out of the lease, or the rental agreement, once an acceptable replacement roommate has been found. If the remaining roommate rejects the proposed new roommate without good cause, then the departing roommate should be released of any further obligations. This arrangement is similar to a provision in the Real Property Law on assignments of leases.
Enjoy your new home, but make sure you protect yourself before you move in!
written by Bari A. Williams
*The Law’s IMPACT is our monthly advice column on topics that young professionals may encounter in their daily travels.