Renting to Roommates: What to Do If a Roommate is on the Lease But Won’t Pay Rent

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As a landlord, you want to lease out your unit and keep it occupied on a regular basis, which could mean you’re renting the property to roommates on occasion. Plenty of landlords opt to rent their units to groups of roommates, but doing so has its advantages and disadvantages.

Offering a multi-tenancy rental unit will increase the pool of tenants to choose from—so it can be easier to find tenants when the unit is vacant. However, if you inadvertently rent to a roommate who won’t or can’t pay their rent, it raises serious challenges.

When one or more roommates can’t pay rent, it can cause friction between the tenants. And it’s more than just roommate friction that you’ll have to deal with. A roommate’s non-payment of rent can ultimately impact your cash flow situation. As such, it’s vital to sort out the problem quickly. Otherwise, you may have no other choice than to evict all of the tenants due to the one problematic roommate.

So, what are your options if a roommate won’t pay rent but they listed as a tenant are on the rental agreement? Here’s what you should do as a landlord—and what options you have—when you need to help the roommates in your unit resolve issues related to non-payment of rent. 

Start by ensuring that all tenants are actually on the lease

Before you take any steps to help resolve a non-payment issue, you should be sure to have all tenants listed on the lease agreement. Having all of the tenants named on the rental agreement will help to ensure there are fewer problems between them.

The lease should also state that the tenants are “jointly and severally liable”—which means that all of the roommates in the unit will be held equally responsible for any lease violations. What that means is that if one tenant can’t or won’t pay their part of the rent, all of the roommates are affected. As such, the late fees are jointly charged to everyone on the lease. 

This is a good starting point to ensure that you can properly—and legally—deal with the tenancy issues that arise, including any non-payment problems. And, when they do arise, you can take the steps below to help them resolve the issue.

How landlords can help roommates resolve a nonpayment issue

It’s typically up to roommates to work out their own issues with paying rent rather than getting you involved. As such, some landlords opt to collect a single rent payment to make it easier—and to stay out of the rent disagreements that can occur among tenants.

However, many landlords opt to use a rent collection app with a “split rent with a roommate” option to make it easier for roommates to pay their portions of the rent. Whatever you choose, it’s important to do what you can to ensure that roommates can amicably resolve their issues. 

That said, there will likely be times when you need to help intervene or mediate when a roommate is not paying their rent—but the other tenants are. As such, here are some ways you can encourage roommates to resolve issues when someone listed on the lease either can’t or won’t pay rent. 

1. Have an open conversation.

The first step to dealing with nonpayment by a roommate is to encourage all of the roommates to be aware of situations in which one may struggle to pay their rent. This may require you to encourage the roommates to have an open conversation to talk about what the issue is.

Knowing why a tenant who’s listed on the lease can’t pay rent is essential in resolving the issue. Plus, if the other roommate or roommates can get a clear overview of the situation, they are in a better position to intervene and problem-solve to help deal with the issue. 

For example, you may ask why the tenant is late with rent or why they missed the payment altogether because there may be valid reasons for it. Maybe they are waiting to begin a new job. Or, maybe they have had large, unexpected bills recently. Or maybe they have slipped into a serious financial situation that’s causing them difficulty.

In some cases, if the tenant has got a track record of being responsible, the other tenants may offer to help them out temporarily. This resolves the issue of nonpayment for you—and for your tenant—but the roommates won’t know what the problem is unless they take the time to discuss it.

2. Understand your rental agreement.

As noted above, all of the tenants listed on the lease have a collective responsibility to pay rent and take care of the rental unit. You should typically have each tenant listed as “jointly and severally liable” for this reason.

When roommates are aware of the fact that they are responsible for the rent—even in the event that one is unable to pay—they feel more compelled to resolve matters quickly amongst each other. That’s because they’ll be on the hook for the rent either way—so they have to find a solution.

This also helps to prevent you from getting involved in co-tenant disputes or acting as a go-between with tenants. 

3. Talk to your tenants.

In an ideal situation, at least one tenant will inform you about any rent payment issues with a roommate on the lease. How you decide to act in regard to that information highly depends on the conduct and behavior of the tenants.

In some cases, showing leniency can help avoid a costly eviction. In other cases, it’s best to evict the co-tenant who doesn’t pay rent. And, in cases where there is a master tenant who sublets a room to a friend or colleague, the master tenant can typically evict the tenant who can’t or won’t pay rent. However, the master tenant can only sublet a room if you permit this in the lease agreement. 

That said, don’t do anything in regard to the situation without checking to make sure it’s legal. In all cases, it is necessary to check what state laws say about evicting a roommate who is named on a lease or roommate agreement. 

4. Roommates should document poor behavior.

Roommates are jointly responsible, so it’s a good idea for the other roommates document what is happening with a roommate who won’t pay rent. This is similar to the type of documentation done by landlords who want to evict a delinquent tenant.

To properly document the issue, the tenants should keep records of partial payments, missed rent payments, or any damage that the unruly tenant has caused. The tenant should then pass these documents on to you if you decide to evict the tenant for nonpayment of rent. 

How to avoid leasing to a roommate who won’t pay rent

If you have a multi-tenancy rental unit, you can take steps to avoid issues stemming from a roommate moving out without paying rent. For starters, it’s important to complete the same screening process as you would if only one tenant is on the lease. 

Here are some other helpful tips for renting to roommates or co-tenants.

Use the right type of rental agreements for co-tenants.

The rental lease is the key to minimizing potential problems with co-tenants or roommates. The lease should name every tenant in the unit and should also state when rent is due, the amount of rent that’s due, the tenancy rules, and what is required for maintaining the property. Additionally, you need to include any clauses about pets, smoking, and access to the unit for regular inspections.

With co-tenancy agreements, one of the most critical clauses on the lease is that all tenants are “jointly and severally liable.” This acts as an incentive for each tenant to take responsibility for the behavior of their roommates, as they will all be found equally liable for any issues that occur regarding the unit. 

Be smart about subleasing arrangements.

It’s typically a good idea to include a clause in the lease that states tenants can sublease a room in the unit. That’s because a tenant may want or need to sublet if their former roommate moves and they need a new roommate to help pay rent until the lease is up.

However, allowing for subleasing will carry risks for landlords. For example, sublessors typically aren’t liable for the rental agreement obligations like the original tenants are—which means that the burden will fall on the original tenant if there are issues.

If the tenant wants to find a new roommate, you as the landlord should always screen the potential tenants beforehand. You can carry out the relevant screening tasks, like background checks, rental history, confirmation of income, and credit reports. You can then draw up a new lease or make an addendum. The most important thing is to ensure all tenants are “jointly and severally liable.”

Handle security deposits properly.

If a roommate moves out, you’ll need to handle their part of the security deposit—and how that’s done should be explicitly stated in the lease agreement. As such, it’s smart to have a lease clause stating that the security deposit is only returned when a replacement tenant is found.

Of course, the usual rules about returning security deposits apply, and you should make sure you know any state laws regarding security deposits as well.

Encourage roommate agreements.

You want to do everything you can to avoid issues with a roommate not paying rent or failing to do their share. As such, it’s a good idea to encourage roommates to have an agreement that explicitly states how they will handle issues related to the unit they’re renting.

Landlords are typically not involved in this process, but they can encourage roommates to come to an agreement to help mitigate potential problems in the future—especially when it comes to issues with paying rent and bills. The roommate agreement should typically address things like splitting bills, noise, guests, cleaning, and how rent is paid. 

Use a rent payment app for tenants.

If you’re renting to roommates, it is also generally a good idea to use a trusted rent collection app that has a feature that allows you to split rent with roommates. This way, each tenant is personally responsible for their portion of the rent. It can also simplify rent collection for you—and make it easier to evict a roommate if they can’t pay rent. 

Final thoughts

Renting to co-tenants can be a smart move as a landlord. Doing so can help reduce vacancies in your units and make it easier for tenants to afford the rent each month. That’s especially true in large cities, where monthly rent prices can be a few thousand dollars each month. However, there is always a risk of one of the roommates defaulting on rent—which can cause issues for you and your tenants. 

When these problems arise, it’s important that you encourage roommates to resolve their issues quickly. It’s also extremely important that each roommate is named on the lease and is “jointly and severally liable.” That’s the best way to protect your assets and avoid getting into disputes with roommates in a co-tenancy.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.