How to Inadvertently Become a Landlord
It may sound far-fetched, but it happens more than you think; normal homeowners inadvertently become landlords. Time and time again, I have clients approach me with this problem. In this article, I will present similar scenarios and possible solutions to resolve them.
Example 1: Eric, Adam & Brittany
Let’s say “Eric” lets “Adam” live with him. Adam is Eric’s brother. Adam said he would only stay for a couple of months and then move out. It’s now been over a year, and he has not made any effort to move out. Moreover, Adam now has a girlfriend, “Brittany”, who has moved in. Eric is now Adam and Brittany’s landlord. If your tenant is a sibling, friend, or other nonromantic partner, you should consider a lease agreement.
In simple terms, a lease agreement is a legal contract between the tenant and landlord, transferring possession and use of the rental property. It specifies the duties of each party and is enforceable by both the tenant and landlord. Most importantly, the lease specifies when the tenancy begins and when it ends.
In Example 1, If Eric and Adam had entered a lease agreement, not only would this have been a great opportunity for them to sit down and have a fruitful discussion about the pending arrangement, but they could have clearly defined the terms of the arrangement in writing.
Now, Eric is forced to sue Adam & Brittany and explain this shoddy arrangement to the court.
Example 2: Carrie & Derek
Another scenario where this is common is in romantic relationships. “Carrie” owns a house. Last year, Carrie fell in love with “Derek”. Carrie and Derek decided to move in together and live at her house. A couple of weeks ago, Carrie and Derek broke up. Derek said he would move out but has not made any efforts to do so. Carrie is now Derek’s landlord. If your tenant is a romantic partner, I highly suggest a cohabitation agreement.
A cohabitation agreement is an agreement between parties who plan to live together or are already living together in an intimate relationship other than a valid marriage or registered domestic partnership. A cohabitation agreement can be used to govern the parties’ personal financial agreements and/or the various business and property transactions contemplated to be entered into in the future.
In Example 2, Carrie and Derek had plenty of reasons to enter into a cohabitation agreement. They were in a romantic relationship. Not only will Carrie have to evict Derek, but she will have plenty of issues when it comes to the personal property in the house. Carrie will have to explain the arrangement to the Court and that she feels all/some of the household personal property belongs to her.
Call the Professionals
While it’s easy to be blinded by the relationship with the tenant, whether they’re a sibling you love or person you love, it’s difficult to initiate the conversation to involve an attorney and even more difficult to draft legal documents alone. Therefore, the assistance of an experienced attorney is essential to drafting a lease or a cohabitation agreement. For a free consultation with an experienced attorney, please call Denise Medina at (248) 912-3220, or email her at DMedina@TheFGFirm.law.