"Authorized Resident" vs. Tenant

[Art Maydan]

I'm managing a property with a 4-bedroom coachhouse. I wasn't the one who found or signed the tenant. They're four young adults who seem to be splitting the rent equally, but on the lease, three of them are tenants and one is under the "People authorized to occupy this premises" section. One of the tenants contacted me and said that the "authorized resident" is moving out and here's the info of the person who will be subletting from him. I was going to reply that he needs to go through the screening process and all that, but I'm not even sure how this works legally since the guy who moved out isn't even a tenant. Seems to me the three tenants are on the hook for full rent and the fact that they're getting part of it from this authorized tenant is irrelevant. So is it just a matter of removing him as an authorized resident and adding a tenant? In which case, proceed like a normal sublease with screening but do an addendum instead of a sublease agreement? It's a 4-bedroom house so I'm pretty sure I'm allowed to have 4 tenants, right?

Much Appreciated,

Art

[Marcia Maynard]

@Art Maydan  Welcome to property management!

It's not uncommon for the make-up of a household to change over time, especially with long-term tenancies. So it's good to have an established procedure for removing or adding people to a rental agreement. Often this can be done by writing an addendum to the agreement and having all parties sign. Sometimes its best to start with a new rental agreement.

We prefer M2M (month-to-month) rental agreements over leases that lock both parties into a longer term. We have great long-term tenants who have been on M2M rental agreements for over 20 years! The great thing about M2M agreements is the ease by which you can change the terms of the agreement or even end the agreement when necessary. With M2M you also don't need to the "lease renewal" dance and paperwork.

Most good rental agreements and leases do not allow "subletting". This is for good reason. If you allow subletting, you lose some control over how your unit is used and the quality of tenant who will occupy it.  Also, be aware that even "authorized residents" and "authorized occupants" establish full rights of tenancy as soon as they fulfill what is needed to do so by the laws of the jurisdiction. It is best to hold any adult occupant (age 18 or older) accountable by making them "jointly and severally liable" as a party to the rental agreement. Be clear in your rental agreement about short-term guests and what would happen if a "guest" stayed long enough to establish tenancy.

Federal HUD standards establish maximum occupancy as two per bedroom plus one. Our standard maximum is two per bedroom and is easily upheld as reasonable. There is no question a four bedroom home would easily accommodate four people.