Having tenants that split rent payments is not an uncommon scenario. In fact, it may be even more common than a single rent payment for many landlords, especially in college towns. While there is nothing inherently wrong with having rent paid by multiple tenants, it can lead to confusion and headaches if one of the renters isn’t pulling their weight. Thankfully, there are several ways that you can protect yourself in this unfortunate scenario.
Pros and Cons of Split Rent Payments
- It’s more affordable for tenants, so they are more likely to pay, and your units stay full.
- Tenants can divide the cost in case of tenant-caused property damage.
- More accountability when it comes to care and maintenance of the property.
- Keeping multiple payments organized.
- Lease disputes when one tenant wants to leave.
- A bad tenant potentially forces you to lose a good tenant if one of them isn’t paying their portion of the rent.
What Should the Lease Say?
Leases are never copied and pasted, especially in a multi-tenant situations. Your lease agreement should be specific to the situation. but also include the following amendments:
1. Joint and Several Liability Clause
This clause states that all tenants are responsible for covering the total rent. Even if one tenant doesn’t pay their portion of the rent, that does not absolve all other tenants from the responsibility of covering the total rent each month.
2. One Lump Security Deposit
Splitting the security deposit at the end of a lease can be a nightmare, especially if multiple tenants have been in and out throughout the years. Put into writing that the security deposit must be paid in full in one lump sum, and it will only be returned in one lump sum.
3. ALL Tenants Must be Screened
It is not uncommon that at the end of a lease, one tenant may leave, and another may stay but bring on a new roommate. The lease should explicitly say that any new tenants at any time of taking up residence need proper background screening and to sign a lease agreement.
4. Add Rent Splitting to the Lease
A stipulation in the lease that explicitly states how the rent payment will be split, i.e., evenly between parties, will hopefully negate any problems between your tenants later.
What Happens if One or More Tenants Don’t Pay?
Ultimately, if you aren’t getting the agreed-upon rent, you will be forced to evict all the tenants. To avoid a situation like this, there are a few steps you can take to ensure your tenants pay.
1. Have an Open Dialogue
Talk to your tenants to find out what the problem is to see if you can work out an agreement to get them back on track.
2. Encourage a Roommate Agreement
Encourage your tenants to work out some kind of legal document between them so the issue never comes to your doorstep. In addition, encourage tenants to document any behavior by other roommates that may affect them legally or financially.
3. Make it Easy to Pay
Sometimes the issue may be a cash-on-hand problem, so you should always give your tenants as many ways to pay as possible, including accepting credit cards as payment.
One Simple Solution
Whether it is when to pay, how to pay, or how much to pay, there is a straightforward solution for all of it. LandlordStation offers simple payment software that covers everything you need to cover when it comes to payment agreements. Our payment platform accepts multiple forms of payment and is set up to charge a recurring payment to each tenant at the same time every month. This is just one of many ways that LandlordStation will make being a landlord a more enjoyable experience for you.