Getting to Grips with Room Lease Agreements
Room lease agreements, roomer agreements, and boarding agreements are all terms that are used in various circumstances to refer to the often forgotten "middle child" of aspiring landlords: the roomer.
Defined somewhat arbitrarily by age, the tenant of a room lease agreement will usually be in need of affordable housing but may not have the means to rent an entire unit on the open market or may otherwise desire the convenience of a more flexible arrangement. Of course, the fact that these tenants rely upon room lease agreements to find a place to live does not increase the protections that a room lease agreement affords them. The typical tenant renting an apartment , condo, or house would not assume that they would not have the right to exclusive possession. Similarly, where a room lease agreement is used, the landlord must provide a right of cancellation notice equal to or greater than one month in order to be compliant with State law. A landlord abiding by these legal requirements ensures that they are entering into a room lease agreement without risking an outcome where their home is occupied without proper notification and subject to non-eviction recovery.
What Needs to be in a Room Lease Agreement?
The room lease in Texas must typically contain four key elements: rent, duration, security deposit, and house rules.
Rent
Except for online services such as Airbnb and VRBO, short-term rentals in Texas are typically rented by the week or month. Requiring monthly rent is the easiest way to comply with the requirements of federal law. Federal law prohibits discrimination in housing based on a person’s source of income, which is typically employment. A person who pays rent weekly or monthly is likely employed. Also, a short-term landlord is not required to collect a security deposit from a person that has a housing choice voucher (formerly known as Section 8 Housing). A housing choice voucher pays all or a portion of the person’s rent. A person not paying rent does not have a source of income. However, a landlord cannot discriminate in housing based on a person’s source of income.
Duration
The duration of the rental is critical to the agreement. The duration of the rental must be clearly stated in the contract. A short-term rental is considered one that is less than six months.
Security Deposit
A security deposit is typically required to protect the short-term landlord from potential losses. The advance rent is not considered a security deposit. Rather, advance rent is a portion of the rental amount being collected prior to the rental period. Regulation of a security deposit depends on the length of the term of the lease. For agreements less than six months in duration, the short-term landlord is not required to deposit the security deposit into an Account. The third party collecting the rent is required to deposit the security deposit into an account if the term of the lease is greater than six months but less than a year. The duty to deposit the security deposit into an account may be waived.
House Rules
House rules are special rules that apply to the rental property. Owners of a residential property may have rules that apply to access to the property, use and care of the property, and move in and move out of the property. Short-term owners should discuss house rules with each person prior to the move in of an individual, group, or family. The discussion should include any fees for late payment, smoking in the property, cleaning of the property, trash collection, pets in the property, parking, use of common areas, pool use, and ending of the rental.
How to write a Room Lease Agreement
When it comes to Part 3 of the 2002 Housing (Scotland) Act, which introduced the rent a room lease, many landlords are asking how to draft a rent a room lease agreement and more importantly, what legal wording should it have in it? The process is made easier by the fact that there is now a prescribed form under The Rent (Prescribed Form of Agreement) (Scotland) Regulations 2016. That said, landlords may want an agreement which is more specific to the requirements of them, the room they are letting etc. Below, we set out some of the details to think about when considering how to draft a rent a room lease agreement.
The prescribed form is a basic framework for a rent a room lease agreement and is as follows: In addition to the above, we would strongly recommend including a few additional clauses: The consequences of failing to comply with the prescribed form will have serious consequences for both the landlord and the room let tenant. It is important to note that a rent a room lease is exempt from the requirements under the Repairing Standard, however, there are a number of other legal requirements with which room lets must comply. These relate to: A further caveat for consideration is the poor condition of the Property or any other issues which may be detrimental to the tenant. By its very nature, the room a room lease agreement will often incorporate a room within a larger property. Many of the properties being let for commercial use were originally places of residence and so the standard of accommodation can often be rather substandard in terms of modern accommodation requirements. However, it is still recommended that landlords include disclaimers to limit potential liability for any deterioration of the individual room. It is also a good idea to include an indemnity from the room let tenant should their guests cause damage to any part of the Property.
Common Room Lease Agreement Mistakes
When signing a room lease, tenants and landlords may overlook certain crucial clauses that can lead to significant difficulties in the leasing relationship. For both parties, the most frequent mistakes in room lease agreements are:
i) Failure to carry out a proper inspection of the conditions of the premises;
ii) Missing out clauses on common areas and facilities;
iii) Not limiting the liability of the owner;
iv) Not containing a general termination clause.
If you are a landlord, conduct a thorough pre-lease inspection of the condition of the premises. Ensure that photographs are taken of any damage or stains on the walls and document the response of the tenant(s). Keep a file with all correspondence exchanged for the duration of the tenancy.
You should also do an annual audit with a checklist to ensure everything is operating as it should and there is no further damage. Utilize a checklist that includes each room and their corresponding items like a water heater and bathroom fittings. For every item, the checklist should have options like "excellent," "satisfactory," "unsatisfactory," or "needs repair." Remember to include basic health and safety checks like ensuring emergency exits are clear and fire extinguishers are installed and in working condition.
Always include a clause in the written lease agreement that stipulates that the cost of ordinary maintenance and repair of the facilities is for the account of the tenant. Define ordinary maintenance and repair to mean anything not associated with the normal wear and tear of the facilities and items available to the tenant. This will prevent the tenant from claiming this expense from you.
For example, if the tenant disengages the taps from the walls and drops these taps and breaks the copper pipes, the cost to fix the taps and the pipes will be for the tenant’s account. If a light bulb burns out (as it would after a year’s usage), the cost to replace it will be for the tenant’s account. If the bathroom fitting is damaged from regular use, you will be liable to replace it.
It is also important to limit the liability of the owner. Clause 16.1 in the standard ACC 4 tenants’ lease agreement states "16.1 The Tenant acknowledges that the Owner will not be responsible for any injury to the Tenant or any failure or interruption of any amenities supplied by the Owner, including electricity, utilities or services, nor for any damage to or loss or theft of the Tenant’s property, unless such injury, failure, interruption, damage, loss or theft is due to the gross negligence or willful and alarming conduct of the Owner."
This clause can easily be overlooked when entering into a room lease agreement with a tenant. While this particular clause is more convenient for a landlord in a standard ACC 4 tenants’ lease, there is no harm in including this clause in your room-letting lease and limiting your liability.
Resolving Room Lease Disputes
Resolving Common Disputes that Arise from Room Leases
While moving forward in the right direction is always the goal, it’s inevitable that disputes will arise. The landlord and tenant – in this case the homeowner and the lodger – have to be prepared to resolve them amicably.
If irritation between the homeowner and lodger persists, there are a number of ways to resolve them. Firstly, we advise that the two should discuss their problems face-to-face. It’s almost a certainty that if you try to resolve a dispute strictly through email or text, you’ll find that you’ve made the situation worse. If this fails, it’s time to bring someone unaffiliated with the situation into it. This is where a third-party becomes involved. In the case of a dispute with a lodger, the homeowner can ask one of their friends to act as the mediator. The mediator should be someone that both the homeowner and lodger trust; preferably with no direct involvement in the dispute itself . We’ve written more about the obligations and qualities of the mediator above. If the issue is still not resolved, then the homeowner and lodger should seek redress through the courts. Essentially, there are three legal remedies that can be deployed in cases of renting to a lodger. First, you may seek a claim of damages. This is a general term that describes compensation awarded to a party because of a breach of contract. Second, the lodger may sue for a court order. This happens if a party wants money that they are unable to collect otherwise. Generally, this will be used for small amounts of money. Lastly, a party may be awarded an injunction. An injunction usually comes in the form of a court order that prevents a party from undertaking a particular action. (In this case, it may be to stop the landlord from illegally evicting the tenant.)
Room Lease Concerns and Local Laws
There are numerous legal considerations and local regulations that can impact the ability to rent a room on a short-term basis. It is strongly recommended that landlords do a check with their local government offices before renting out a room and prepare a lease agreement that covers their rights and responsibilities under the law. Here are a few important considerations:
Tax Implications – Many municipalities have taxes that apply to short term rentals that are not normally found with traditional leases such as hotel taxes. Typically these taxes must be remitted to the local government after the room is rented. In some areas, landlords renting a room illegally may be responsible for paying the tax on behalf of the guest.
Zoning Bylaws – Many municipalities have restrictions on short term rentals particularly in residential areas. These restrictions include a limit on the number of rooms that can be rented and specially zoning requirements to run a business out of a residence. Failure to comply with these bylaws may result in fines, the requirement to cease or modify operations and in some cases, confiscation of rental revenues.
Rental Agreements – If renting accommodations is for profit (i.e., it is not hosted accommodation), many jurisdictions require rental agreements to be in writing, landlords to give written notice to vacate, show a rental agreement even if the rental was not paid for and limit the amount required for a damage deposit.
Privacy Laws – Each province has a privacy law that protects the personal information of guests. The implementation of PIPEDA (a federal privacy law) has made compliance with privacy laws more complex and is not easy for companies to do. Failure to comply with these laws can result in substantial fines. It is recommended that the landlord determine what responsibilities they have in relation to personal information collected from guests.
Room Lease Tips for Landlords and Tenants
Entering into a room lease agreement requires a commitment, and as such it’s important for both landlords and tenants to practice good communication and keep meticulous records.
While it’s easy to avoid the important stuff when a gentle understanding is the rule of the day, good communication between landlords and tenants is crucial in part because so many issues can arise over time. The best defence against problems is to keep a clear line of communication open. An open line of communication will simplify many issues.
Although general provisions for the tenancy were covered in the agreement, some may require clarification as you go along . Agreeing to an "understanding" about these matters ensures that you’re on the same page and therefore avoiding confusion. These important but perhaps overlooked issues include: house rules; parking and garage use; laundry facilities; gardening chores; cleaning standards; television and audio-visual equipment use; and recreational activities.
Common issues that arise in a landlord-tenant relationship are:
Rental payments
Guests
Pets
Loud or disruptive behaviours
House rules
Roommate conflict
Documents to keep include: the written room lease agreement; all notices during the tenancy; rent payments; photos of the premises when moving in; contents of the room; deposit receipt; and record of damages to the room or apartment.