3 Tenants, One Unit. One Lease or Three Leases?

[Ken C.]

I asked this in another forum (in an admittedly long and rambling post), and did not get an answer to this specific question. The space in question is one of 5 units in a light industrial building. Three people want to share the unit. Is this one lease that all three of them sign, or three leases, one for each of them.

If one of the three does not pay, then what? How does one manage a shared rental? Making this a little more messy, is that the person asking setting up this arrangement is a family member who has been able to use the space rent-free for several years. Now the space is being readied for rent, and they would like to continue using the space. They cannot afford the rent on their own, so they are looking at sharing the space.

Any advice on this? 

[Jennifer Hicks]

In my experience with multi-tenant leases for a single unit, one thing we have verified is that each individual tenant could carry the lease themselves if need be financially. So you could sign a single lease where all tenants are responsible for the lease payments, and let them divvy up the share of the burdens of the lease agreement. 

By ensuring that each tenant member is capable of covering the lease by them selves, you are at less chance of risk of non-payment, should things go sideways. 

As always in any situation with a tenant, it is best to build rapport with them and have an open door so if financial troubles were to appear, you are on the short list of notification of such events, and work with them towards a situation that makes everyone as whole as possible.