Why do all Residence need to be on lease?

Question

Hello Bigger Pockets Family,

I am a newer investor and have a question. I did my first BRRRR deal recently and got the place rented in July. The tenet was a single guy and had a great profile from all the screening. He is a disabled vet and gets full VA benefits and SS that is more than 3 times the rent and set up auto pay for rent on the 3rd of every month. He so far has kept the place in great condition, and has even spent about $500 on landscaping items to make the exterior even nicer. All in all an exceptional tenant and I feel very blessed to have him as my first tenant.

However here is the dilemma. ￼During the screening process he mentioned that his niece would be staying at the house for the first few weeks to get him all settled in. However it’s been about four months now and the niece is practically living there. The tenant moved from New York to South Jersey￼, he claims he needs his niece to help do the shopping and cooking and such and that she only stays there about four or five days a week and spends the rest of her time in New York. I know from reading the books and generally following bigger pockets it’s important to have everyone who’s living there on the lease. When I asked them about adding the niece to the lease I got a lot of resistance stating that because she’s on a lease in New York she can’t be on the lease here. I don’t want to rock the boat and upset the tenant because everything has been great thus far. However I’m hoping to find out exactly why it’s so important to have the residences on the lease. The tenant clearly qualifies with income and everything else by himself. I just want to make sure I’m not missing some liability aspect.￼￼

Any advice would be great. Thank!

Joe Splitrock · Answer

@Shawn Stiteler some people are saying you need her on the lease to evict her, but that isn't really correct. Any time you do an eviction always evict John Doe and Unknown Occupants. Adding Unknown Occupants to the eviction covers any random person that may be inside the property when you go to take possession. It is no harder to evict a named person, then it is an Unnamed Occupant. It could even be easier with Unnamed in some situations.

That being said, without her on the lease, you will have difficulty getting a judgement to collect unpaid rents. It is also difficult to ask her to follow lease rules, if she never signed the lease.

I am normally 100% in favor of all occupants being on the lease, but in this situation she is acting more like a care giver and has a full time residence. For that reason, I wouldn't require her to be on the lease.

Mitch Messer · Answer

Hi @Shawn Stiteler, this is a great question!

Let's me answer with the following scenario: Your wonderful tenant one day up and moves out. (Maybe he has a disagreement with the niece, or perhaps for some other reason.) Unfortunately, the niece does not move out. Now you've got someone living in your house who you know absolutely nothing about: not her full name, not her SSN, no information whatsoever!

What if she's a deadbeat tenant? Or a violent felon? What if she's a registered sex offender? If your normal selection criteria wouldn't allow these kinds of tenants, why would you allow anyone to sneak in the "backdoor" and take up permanent residence in your property without the same scrutiny you apply elsewhere?

For the record, there's no restriction that I know of that prevents someone from signing leases on two separate properties; parents cosign for their children all the time!

You should be asking yourself why you're getting such strong pushback...

Sergio B. · Answer

I used to have a calculus teacher that will say, "believe me , this is the way the problem is solved , don't ask me for proof" . When in doubt, trust how the pros do it.

Roberta Eastman · Answer

Hi Shawn

Congrats on your success!

Please remember you are running a business.  Your business process says anyone staying in the apartment, over the age of 18 must be on the lease.

Everyone over the age of 18 who will be in the house, submits all their paperwork (ie pay stubs; taxes, social security card, drivers license, references with relationships to those references, etc) so you can run a background check.

(if these are the types of rules to protect yourself, that you want to have in your business)? If you have not thought through the rules for your business, you would be encouraged to do so.

Once they are your rules, adhere to them.

I just had a mom who would be staying for 2 weeks at the beginning of a move in.  I did an addendum to the lease, mom was allowed to stay for 2 weeks, any longer mom would submit to background,  Tenant signs with all other paperwork, just so everyone is clear.

I agree with Mitch, Ive never heard of a rule that says anyone cannot sign a 2nd lease. If there is such a thing, it must be provided in writing by current landlord in New York.

If there is any type of statement from a tenant, that is in disagreement with your rules, it must be proven in writing.

If you do not have her sign a lease and you ever need to evict and obtain damages, you will not be able to place a judgement against her if she is not on the lease.

Hope that helps,

Dillon Dale · Answer

@Shawn Stiteler it's in case you need to evict you can get them both out easier. For example without her on the lease, you evict him and she still holds over you'd need to do the process again and it's more difficult without her on the lease

Mark F. · Answer

I'm with @Joe Splitrock on this one, if he is a good tenant and paying leave it be. I've had to do the "Tenant and unknown occupants" on an eviction and when the Sheriff shows up with the court order they don't care who is there, everyone MUST leave then and there or get charged/arrested for trespassing.

Turok Tarango · Answer

@Roberta Eastman good stuff! Thank you :)

Zachary Ray · Answer

Above said it right. In case you need to evict, you should have all information on everyone living in your property. Liability purposes as well.

Darren Sager · Answer

@Shawn Stiteler,  @Roberta Eastman gave some great info.  Here in NJ if you have an issue with a tenant and have to evict you need to serve your notices to quit or any paperwork to everyone who's an adult, which is 18 and above from my experience.  I personally don't screen children of parents that are 18 and above, and still are in college or university.  However we do make sure we get all children's full name and DOB to make sure if we do have to send any legal paperwork, they're included.

Shawn Stiteler · Answer

Thank you all for the information. I figured there had to be some reason it was strongly recommended. I had not thought about the eviction or him just up and leaving. He has been great so far so let’s hope this goes smooth.