California Apartment Association

Co-Tenants, Roommates, and Changes in Occupancy

Floyd Diebel

Practical Considerations for Rental Property Owners

Many tenants choose to live in shared housing situations for a variety of reasons, such as marriage, romantic cohabitation, or simply because they cannot afford the rent on their own. Changes in occupancy, subleases, assignments, and roommate conflicts can be a major source of confusion for a property owner. This paper discusses some of the common issues that arise when co-tenants share rental housing and some practical considerations for property owners when faced with these issues.

Screening Co-Tenants

The same general rules that apply to screening any applicant are applicable to screening co-tenants. The property owner should require each applicant 18 years of age or older to complete an application to rent and should evaluate the applicants to determine whether they meet the owner’s established screening criteria. Property owners must decide how they will handle the resulting information, i.e., whether to combine the qualifications of the applicants or require each applicant to qualify independently. For example, if one co-tenant applicant has a dismal credit rating but the other has a stellar credit rating, the property owner must consider whether the applicants together meet the owner’s credit score criteria or whether each person must have the minimum required credit rating. Be aware, if married couples are permitted to aggregate their income or combine their credit scores to meet the screening criteria, the law requires the property owner to allow unrelated co-tenant applicants to do the same.

Naming Co-Tenants in the Rental/Lease Agreement

Every person residing in the unit should be named in the rental or lease agreement as either a tenant or occupant. CAA recommends that, as a general rule, all persons over the age of 18 should be named as tenants and should be required to sign the agreement. Individuals under the age of 18 should be listed as occupants (not tenants) on the rental/lease agreement of the responsible adult. Minor household members should be added to the rental/lease agreement as tenants (who sign the agreement) after turning 18. Property owners should maintain complete and current information on every person who is residing in the rental unit.  This is extremely important if the property owner has to serve a legal notice on the resident, such as a notice to pay rent or quit or a notice to terminate the tenancy, as all tenants must be named on the notice.

Non-Tenant Relationships Distinguished 

Occasionally a person who is over the age of 18 and permanently occupies the unit can be appropriately designed as an occupant (who is named in the rental/lease agreement but does not sign it), rather than a tenant. For example, when a disabled adult lives with the tenant, he or she may be designated as an occupant as a reasonable accommodation. By contrast, if a non-tenant occupant is only temporarily occupying the unit, he or she is a guest. It is not appropriate to name guests in the rental/lease agreement. California law does not specify how long a guest may stay in a tenant’s rental unit. It is important, however, for a rental/lease agreement to limit the duration of guest visits, so that guests do not become occupants with legal rights. CAA has created a Long-Term Guest Addendum (CAA Form 64.0) that can be used when a tenant will have a guest who will be staying in the rental unit for a fixed period that is longer than the period of time allowed by the rental/lease agreement. Property owners who allow long term guests should develop a long-term guest policy that they enforce consistently in order to avoid violating fair housing laws. For more information about guests, see CAA’s Industry Insights – Guests at Rental Property.

A sublease is an agreement in which a tenant agrees to allow another person (a subtenant) to possess all or part of the leased premises. The “original” or “master” tenant continues to have a landlord-tenant relationship with the owner (i.e. the original tenant remains responsible for the payment of rent), and the original tenant acts as the sub-tenant’s landlord. An assignment is an agreement in which the original tenant agrees to transfer all of his or her legal interest in a lease to another person. The person to whom the lease is transferred “steps into the shoes” of the original tenant and becomes the new tenant of the premises with a direct landlord-tenant relationship with the owner.

In the absence of a prohibition against subleasing and assignment in the rental/lease agreement, subletting or assigning the right of possession by a tenant is allowed. (The “Subletting and Assignment” paragraph of CAA’s Rental/Lease Agreement prohibits subletting and assignment.)

Generally, it is not in an owner’s interest to allow subleasing because it takes control away from the owner in terms of deciding who may and may not reside in the rental unit, and also limits who the owner can hold liable for the rent and damages. Subtenants have no contractual relationship to the owner; this means that the owner can only go after the “master” tenant (not the subtenants) for unpaid rent. Having a policy of allowing co-tenants, but not subleasing, gives the owner the ability to screen all potential tenants and hold all tenants liable for the rent, while still allowing prospective tenants to combine their resources to rent an apartment or house.

Some local rent control and/or “just cause” eviction ordinances limit an owner’s ability to prohibit subleasing in certain situations. Owners subject to a local rent control and/or “just cause” eviction ordinance should consult with their attorney regarding the ordinance’s subleasing provisions.

Payment of Rent

Co-tenants may decide among themselves what portion of the rent each person will contribute. Regardless of any such agreement between co-tenants, the rental/lease agreement usually makes each individual who signs the rental or lease agreement liable not only for his or her “share,” but for the entire rent, should any other co-tenants default. Thus, if one tenant cannot pay his or her share of the rent in a particular month, or simply moves out, the other tenant(s) must still pay the full rent. The paying tenants may recover from the defaulting tenant in an independent civil lawsuit.

Landlords may insist in the rental/lease agreement that rent be paid with one rent check for the entire rent amount, rather than several checks from individual co-tenants. The “Rent Payment” paragraph of CAA’s Rental/Lease Agreement provides that rent must be paid in a single payment.

Security Deposits

One of the most common disputes between a landlord and a tenant is the disposition of a tenant’s security deposit. California law is clear on the amount of money a rental property owner can collect from a tenant and provides a specific time within which the owner must return the deposit and/or provide an accounting after possession of the unit has been returned to the owner. For more information on the security deposit law, see CAA’s Industry Insights – Security Deposits: Collection and Return, and CAA’s Industry Insights – Walk-Through Process.

The purpose of a security deposit is to ensure the unit is restored to its pre-move in condition (exclusive of normal wear and tear). It would, therefore, defeat that purpose if the deposit or any portion of it were returned by the owner to an individual tenant before the unit is returned to the owners’ possession. California law does not require an owner to return the deposit until 21 days after the unit is returned to the owner’s possession and does not provide for the return of a deposit to an individual roommate. Unless the rental agreement provides otherwise, the security deposit is not divisible and stays with the unit. Accordingly, the deposit should not be returned until after the unit has been vacated and the owner has had the opportunity to assess and make appropriate deductions for damage to the premises. Because the security deposit disposition is not done until the unit is completely vacated, the owner does not have the right to inspect the unit when a co-tenant vacates but the unit remains occupied by other co-tenants.

Unless the tenants have agreed otherwise in writing (for example, if a replacement roommate “bought out” a former roommate’s portion of the security deposit), the owner should issue the security deposit refund payable to all of the tenants, even if one or more of the tenants vacated at an earlier time. As a practical matter, this means co-tenants must work out among themselves what to do when one tenant leaves. If unrelated co-tenants are entering into a lease or rental agreement together, the landlord may want to make this clear at the outset of the tenancy, so it does not come as a surprise when one tenant plans to vacate.

The following solutions are commonly used between co-tenants to resolve the type of situation described above:

  1. An incoming (replacement) tenant may pay the departing tenant his or her share of the deposit. This is advisable only if the unit has been maintained prior to the new tenant taking possession since any preceding damage would be imputed to the new tenant and other remaining tenants.
  2. If there will be no replacement tenant, the remaining tenant(s) can essentially buy out the departing tenant’s interest in the security deposit.
  3. The departing tenant may wait until his or her co-tenant(s) have vacated and seek reimbursement at that time. This may create, problems, however, in the situation where damage occurred to the unit after the first tenant vacated.
  4. If the tenants cannot agree to resolve the dispute among themselves, the tenant seeking to recover his or her share of the deposit may bring an action in small claims court against the co-tenants to recover their share of the deposit.

California law requires that the security deposit itemization and refund be returned to the “tenant.” Thus, the owner should not name non-tenants in the security deposit itemization and/or refund check. As discussed above, occasionally persons who occupy the unit will not be tenants, such as long-term guests and caregivers. These non-tenant occupants should not be named in the security deposit itemization and/or refund check.

Similarly, sometimes a property owner accepts rent payments on a tenant’s behalf from a third party (for example, from a parent on behalf of a child or from payee service on behalf of a disabled tenant). In such situations, owners should ensure they have obtained an agreement signed by both the third-party payee and the tenant. Such an agreement should state that all payments from the third-party payee are on behalf of the tenant, and that the third-party payee has no rights of tenancy (including receiving the security deposit itemization and/or refund). The “Rent Payment” paragraph of CAA’s Rental/Lease Agreement provides that rent payments will not be accepted from third-parties absent a written agreement.

If an owner has been accepting rent payments from a person who is not on the rental/lease agreement or has allowed an additional occupant who is not on the rental/lease agreement to reside in the unit without having a written agreement which clarifies the person’s status as a non-tenant, the owner should consult with their attorney on how to handle the security deposit disposition. In order to protect rental property owners in such situations, the “Rent Payment” paragraph of CAA’s Rental/Lease Agreement states that the owner’s acceptance of payments from non-tenants shall not be construed as a waiver. The “Security Deposit” paragraph of CAA’s Rental/Lease Agreement states that the security deposit refund will be issued in the form of a single check made out to the all of the tenants listed in the rental/lease agreement.

Addressing Roommate Disagreements

Although landlords are under no duty to involve themselves in disagreements among tenants, there are some proactive steps that can be taken to mitigate potential disruptions. For example, the landlord may encourage tenants to develop a roommate agreement that clarifies some of the basic issues about sharing a residence. Disagreements can be kept to a minimum if each tenant understands his or her basic responsibilities. A roommate agreement is not binding on the landlord, but it is binding on the tenants who sign it. There are many valuable resources on the Internet that provide guidelines for a roommate agreement.  No roommates should go without an agreement among themselves.  At a minimum, a roommate agreement should include provisions that cover rent payments, utility bills, guests, privacy, quiet hours, smoking, pets, personal possessions, food, security deposit, bedrooms, parties and the like.

If any dispute among roommates becomes serious enough to threaten the health and safety of tenants or disrupts the quiet enjoyment of other tenants, the owner may need to step in to minimize potential liability. Owners should ensure that their tenants understand that it is not the owner’s responsibility to mediate conflicts among roommates, and that the entire household may face eviction if the conduct of any household member or guest violates the lease or causes a nuisance.

Adding Co-Tenants and Occupants to an Existing Tenancy – Whether It Is Allowed

Owners frequently want to know whether they must allow tenants to add a new co-tenant or occupant to an existing rental/lease agreement, and if they do allow it, whether they can impose additional financial burdens (such as increased rent or security deposit) as a condition of approval. There are various practical and legal considerations for owners to weigh when developing their policies on changes in occupancy. As a practical matter, a policy which forbids the addition of new/replacement co-tenants or occupants, or which imposes financial burdens as a condition of approval, may lead to higher unit turnover and dissatisfied tenants. As a legal matter, local rent control ordinances and fair housing laws may prohibit a landlord from denying a request to add a new co-tenant or occupant or imposing financial burdens as a condition of approval. For example, a policy which prevents tenants from adding their minor child to the rental/lease agreement as an occupant or which requires the tenant to pay an increased security deposit, may violate fair housing laws. Similarly, a disabled tenant may require a reasonable accommodation to have a live-in caregiver, or a tenant may need a reasonable accommodation to add a disabled family member to their household. Due to these various practical and legal considerations, rental property owners should develop a clear policy in conjunction with their attorney for handling requests to add a new co-tenant or occupant, and then should apply that policy consistently

Replacement Co-Tenants – Procedures

When one, but not all, of the tenants in a particular unit vacates, it is important to screen any proposed replacement tenants in the same manner as any other applicant. Owners do not have any obligation to assist a tenant in finding a replacement co-tenant where a co-tenant has vacated. In fact, owners are best served by not being involved in the remaining tenant’s search for a replacement co-tenant (other than screening the application(s)). Assisting a tenant in finding a replacement co-tenant increases the risk that the owner will face fair housing claims. For example, the tenant or a prospective tenant may claim that the owner was “steering” the tenant towards or away from a particular person or group of people in a discriminatory manner.

When there is a change in occupancy, the change should be documented. All tenants who will be residing in the unit should be required to execute a new rental/lease agreement, or the property owner can use CAA’s Change in Occupancy Addendum (CAA Form 5.4) as an interim solution until the lease is renewed or a new rental agreement is executed. A change in occupancy can be a good opportunity for the owner to make sure he or she is using the most up-to-date forms. CAA revises its forms, including the Rental and Lease Agreements (CAA Forms 2.0, 2.0-REN, 2.1, and 2.1-REN) as often as is necessary to ensure compliance with new laws.

If the owner has inherited a situation in which there is no rental/lease agreement on file, or if it does not reflect the current household composition, the owner should attempt to work with the tenants to sign a new rental/lease agreement.  If the tenants are month-to-month and are unwilling to sign a new rental/lease agreement, the owner can issue a 30-day notice to change the terms of tenancy to the terms of the owner’s standard month to month rental agreement. If there is a term lease in place, the terms of the tenancy may be changed by written agreement of all the parties, or by the owner at the end of the lease term. Some rent control/just cause eviction ordinances limit the ability of rental housing owners to unilaterally change the terms of the tenancy. Therefore, if the unit is subject to a local rent control and/or just cause eviction ordinance, the owner should work with their attorney to ensure they comply with the requirements of the local ordinances. For more information, see CAA’s Industry Insights – Rental Agreement: Changing the Terms, and CAA’s Industry Insights – Just Cause Eviction: Eviction Control Measures Throughout California Cities.

Effect of Partial Vacancy on Rental/Lease Agreement

Owners often ask if they can require all tenants to vacate if one co-tenant gives notice of their intent to vacate. Before considering how to remove the remaining co-tenants, the owner should consider if it makes business sense to do so.  If the remaining co-tenants continue to pay the rent on time and abide by the rental/lease agreement, the owner has little motivation to end the tenancy. If the tenants are on a month-to-month agreement, nothing in the law prohibits one co-tenant from terminating his or her tenancy, and leaving the other co-tenants on the rental/lease agreement in the unit. If the tenants are on a term lease agreement, all co-tenants are jointly and severally liable for the rent which comes due during the lease term even though one co-tenant may have physically vacated the unit. This means that the vacating tenant may still be held accountable for any rent which comes due during the remainder of the lease term.

If the owner wants to require the remaining month-to-month tenants to vacate, the owner can serve a 30 or 60-day notice of termination of tenancy without cause. If the tenants are in a lease term, the owner cannot terminate the lease during the lease term without good cause (such as a breach of the lease). However, the owner may choose not to renew the lease when the lease term expires. Local rent control and/or “just cause” eviction ordinances may limit an owner’s ability to terminate the tenancy or refuse to renew the lease without good cause. For more information, see CAA’s Industry Insights – Terminating the Tenancy: 30- or 60-Day Notice, and CAA’s Industry Insights – Just Cause Eviction – Eviction Control Measures Throughout California Cities.

Partial Evictions

A landlord can legally hold all co-tenants responsible for the negative actions of one tenant and terminate the entire household’s tenancy with the appropriate notice. California law has no provisions for so-called partial eviction – where only one tenant is named in a notice to terminate. If it is necessary to terminate the tenancy of an offending tenant, all tenants must be named. While this has been cited as a reason to execute separate rental agreements for each tenant, the possible downside to this approach generally outweighs any benefit. In particular, by executing separate rental agreements, each tenant’s independent obligation to be fully responsible for the rent is eliminated. If the property owner wants to work with the non-offending tenant, nothing in the law would preclude execution of a new rental agreement with any non-offending tenant(s). However, owners should not “champion” one co-tenant over another. For example, co-tenants who were romantically involved often seek assistance from the property owner to remove the other co-tenant after the couple has broken up. While the owner must comply with requirements under the law with respect to changing locks for victims of domestic violence, the owner should not otherwise “choose sides” in a co-tenant conflict. For more information on legal protections for victims of domestic violence, see CAA’s Industry Insights – Domestic Violence & Human Trafficking.

Unauthorized Occupants

A common question is what to do when a person moves into the rental unit without applying, being approved for tenancy, and signing a rental/lease agreement.  This situation can arise in two ways: (1) where a current tenant allows another person to move into the rental unit without the owner’s permission, and (2) where the tenant on the rental/lease agreement has vacated the unit, and the unauthorized occupant occupies the unit.

If a current tenant allows someone to move into the rental unit in violation of a lease provision prohibiting subletting, the tenant has violated the lease. California law technically allows an owner to immediately serve a Three-Day Notice to Quit with no opportunity to cure to a tenant to who has violated a lease provision against subleasing or assignment. However, if it is the tenant’s first violation, it is usually a better practice to give the tenant a chance to fix the problem. In most situations, the owner can serve the tenant with a Three-Day Notice to Perform Conditions and/or Covenants or Quit (CAA Form 11.0-SV) requiring the tenant to either: (1) remove the unauthorized occupant, and not allow any additional persons to move into the unit without first applying, being approved, and signing the rental/lease agreement; or (2) move out and return possession of the unit back to the owner. Owners subject to a local rent control and/or “just cause” eviction ordinance should consult with their attorney as the local ordinance may limit the owner’s ability to require the unauthorized occupant’s removal.

Occasionally, the tenant on the rental/lease agreement will have permanently vacated the rental unit, leaving an unauthorized occupant living in the unit. For example, this situation sometimes arises when an elderly tenant passes away, and the tenant’s caregiver refuses to vacate the unit. Depending on the facts of the situation, it may be possible to treat the unauthorized occupant as an “unlawful occupant” or “tenant at sufferance,” and to evict the unauthorized occupant through either an unlawful detainer or forcible entry and detainer action. However, if the owner has agreed to allow the occupant to stay in the unit, or has accepted rent payments from the occupant, the owner may have created an implied month to month tenancy. Owners should never use “self-help” (i.e. changing the locks, turning off utilities, etc.) to remove a person from a rental unit. If an owner believes a person occupying a rental unit is an unlawful occupant, they should contact their attorney immediately for advice on how to legally regain possession of the rental unit.

Be Prepared

Co-tenants challenges and changes in occupancy are among the most common day-to-day issues handled by rental property owners. The best way for an owner to avoid conflicts and prevent fair housing claims is to be proactive and work with an experienced attorney to create a set of comprehensive policies and procedures for handling changes in occupancy. Having clearly written policies can help not only with preventing issues from arising, but can also provide appropriate and compliant solutions to owners (and their agents) in their resolution.

References

Civil Code sections 54.1, 827, 1659, 1660, 1946, 1946.1, 1950.5

Code of Civil Procedure sections 1159, 1160