REDBOOK Blues – Room for Improvement
As our residents and we slowly adjust to the current turbulent economic and social environment, it reminds me of the tremendous resources available to us as AATC members. AATC membership services, education, and relationships have helped us successfully navigate this difficult time. Next month, AATC is offering our biennial TAA Lease with the Best legal seminar. In addition, AATC members have access to the best landlord-tenant attorneys in Texas through our Legal Services program. Best of all, AATC's professional staff is a great resource when you have questions or concerns about industry best practices.
AATC staff receives numerous calls and emails each month from members with questions about landlord-tenant and operational issues. Feel free to give them a call at (817) 284-1121 or enter a question in the chat feature of the AATC website: www.aatcnet.org.
In general, AATC staff will provide information about industry best practices. Many times, the staff helps our members find the answers and operational insights they need in the REDBOOK. Some inquiries are simple and require a quick reference to a form or legal commentary in the REDBOOK. Sometimes, a member wants the assurance that they are following common residential rental property practices and procedures.
Often, the solution lies within the TAA Lease. Sometimes, the questions are legal in nature and beyond the scope of the staff's expertise. AATC staff are not attorneys and cannot give legal advice. When staff receives a legal-type question, members are referred to one of AATC's Legal Service attorneys.
Over the years, roommates and how to handle them has been a frequent topic of inquiry. Given the job loss and overall economic impact of COVID-19, we anticipate an increase in renters seeking roommate arrangements to help with their rent cost burden.
Whether it is renters seeking to double-up till their finances improve, college students, boyfriend-girlfriend, or single-parents sharing living expenses, having unrelated individuals as parties to a lease contract has both rewards and challenges for the rental housing owner/operator. After about a month, the initial excitement of having an apartment with a friend has worn off, and reality sets in. Like all partnerships, roommates as co-leaseholders are fine. When these arrangements work, they work well; when they do not work, it is bad, really bad.
First, if you have prospective roommates or even current roommates, make sure you are using the TAA Lease forms that pertain to roommates. The TAA Roommate Agreement to the lease is a great place to start. The comprehensive Roommate Agreement enables each co-resident and guarantor to collect monies from a co-resident who defaulted in lease obligations or in obligations to the other co-residents. Like pre-marital counseling, the best part of the Roommate Agreement is that it forces, as a practical matter, the roommates to think about and discuss problems that might arise and what the resolution of those problems should be.
The Roommate Agreement form is not required to be signed by any law, but, perhaps, the form's most important benefit is to help prevent problems from ever arising in the first place. Making the form available to your residents might be doing them a real favor. From a practical standpoint, it might be best to provide this form to them after they have all signed the lease.
Second, take the extra time to fully explain to all parties their joint obligation to the landlord. Paragraph 29 (Multiple Residents) of the TAA Lease is extremely important. Highlight it, mark it with a star, go over it, go over it again and again. Make sure each roommate understands this paragraph. A simple head-nod may not be enough. You may want to get each roommate to initial this paragraph and ask them by name if they fully understand.
Third, ninety-nine times out of a hundred, ALL roommates will be leaseholders. In this case, ALL are subject to meeting rental criteria (credit and criminal history, income, length of employment, etc.). Rent is due the first. As a landlord, you do not care who pays, but you do care how, and most importantly, when rent is paid. You can require one check or one electronic payment. If rent is not paid, then they ALL can be evicted. If damage occurs to the rental unit, ALL are responsible. If one roommate violates the lease, ALL roommates get a lease violation. As we say in Texas: "Y'all means All."
Side note, AATC members encounter roommate situations most often with student-housing and college-age renters. It may surprise you to learn that cities within AATC’s jurisdiction have more than 150,000 college students (UTA, 50,000; TCU, 12,000; Texas Wesleyan, 1,900; Tarleton, 10,500; SWBTS, 2,500; and TCC, 53,000). Frequently, students will need a guarantor to insure financial obligations. If guarantors are required, be sure to use the TAA Guarantor form. Roommates could save themselves (and their guarantors) a lot of headaches if they put in writing what they assumed or intended when signing a lease.
Fourth, if there is a guarantor(s), state law covers this relationship. The REDBOOK has an outstanding article on the role and responsibilities of a guarantor(s). Basically, Texas law ensures that rental agreements specify the term (length of time), the amount of rent, and other financial obligations of the guarantor. As a practical matter, good communication between the landlord and the guarantor(s) is critical. They need to know what their responsibility is if the leaseholder(s) fail to meet their obligations under the lease.
Finally, believe it or not, couples fall in and out of love, college students get homesick, and roommates have conflicts— relationships change when folks start keeping house together. Landlords make lousy relationship counselors. Do not even try to go there. It is not your job – you and your staff are not Dr. Phil. Frankly, from your perspective, you should not care about the roommate drama, so long as you are being paid everything you are owed on the first of the month and there are no other lease violations.
If a roommate moves out, unless ALL parties agree (most importantly you, the landlord) to release them from their responsibilities, they are still obligated under the lease. If you and ALL roommates agree to a change, TAA recommends you use the TAA lease addendum to add to remove the roommate. This form is a great way to ensure that each leaseholder understands their obligations during the remainder of the lease.
The bottom line is that roommates make great residents, especially if you take the time to communicate their obligations to you and each other.
John Gillespie, WAK Property Management, is the AATC Government Affairs Committee Chair.