Lease Agreement Question

[Eric Geiger]

I just purchased my first rental property (3 bed/1 bath townhome).  I am in the process of finding a tenant and have interest from a couple different groups of young adults.  Both situations are 3 non related young adults that would be splitting the rent.  My question is, do I have 3 separate lease agreements for each person?  Any and all advice is much appreciated.

[Bjorn Ahlblad]

@Eric Geiger welcome to BP! Congrats on becoming a LL. You will have one lease for each and other than names etc. the leases will be the same.

[Eric Geiger]

Thanks Bjorn!

[Adam Martin]

I would think if they are applying together you would have 1 lease and they are all jointly liable for rent and damages.  If you have 3 leases this would complicate things since 1 person can leave and then you would have to rent 1 room with the other 2 that were left behind.  If there was damage to a common area who is responsible at the end as you wouldn't be returning one deposit.  Lots of people rent their property by the room but it seems to be a hassle and I would want to be compensated for that.  Also if there are issues at the end if they are on one lease you can just get a judgement against the most collectable vs trying to collect each persons piece.

[Steve Vaughan]

Sounds riskier with higher chances of drama and turnover than a regular couple.  Add a no surprises clause and only do mtm.  Bf/gf's and animals are in your near term future. 

Is your rental market weak?  I'd keep looking. 

[Nathan Gesner]

One lease with all three on it. You should have a "joint and several" clause that says each individual is 100% responsible for the terms of the lease. That means rent is due in full on the first. If it's not paid in full because Tenant B failed to pay his portion, all three Tenants are subject to late fees or eviction.

Three or more unrelated renters are high risk. There's a very good chance they are pooling funds to afford something that is otherwise unaffordable. There will be more traffic to the rental, more wear-and-tear, higher risk of noise complaints or parking issues, parties, etc. In the end, there is a very, very good chance that at least one of them will want to leave and the remaining tenant(s) won't be able to afford the rent so everyone will scramble to find a replacement, usually anyone with a heart beat and a minimum-wage job.

Hate to be a Debbie Downer but it's reality.

[Stephen J Davis]

I would keep looking. This is a recipe for trouble. Find a family and only use one lease.

[Eric Geiger]

Appreciate all the input!  I just signed a lease with a young family on the property and was able to avoid this issue altogether.