If you drive down Main Street in any college town, you are likely to encounter newly developed and/or renovated luxury apartments. Many of these apartments will have rent that outpaces the average mortgage payment in the region.
A common issue that arises with these off-campus apartments is the joint and several rental obligations of multiple tenants who are a party to the same lease. Sometimes, rent is split 2-ways or, in some circumstances, 4-ways. But, unless the lease agreement explicitly states otherwise, each tenant is jointly and severally liable for the entire rental amount, regardless of how many roommates are chipping in for rent each month.
Consider the following example: Suppose three roommates are splitting an apartment with rent totaling $1,500/month. Split three ways, each roommate only expects to pay $500/month. But, further suppose that after only two months of school, two of the roommates decide that they are homesick, want to transfer schools, fall ill, incessantly fight, or unexpectedly move out for any other reason. The third roommate, who budgeted only $500/month for rent, is now required to pay $1,500/month for the remaining ten months of the lease. His or her failure to do so will result in an eviction (and likely a lawsuit from the landlord seeking the entire rental amount anyway).
One way to combat this problem is to enter into a Roommate Agreement – a contract separate from the lease, signed by all roommates, that outlines the obligations and expectations of each roommate. Any number of items can be included in a Roommate Agreement (i.e., who takes out the trash, who does the dishes), but the most important component is clearly outlining how much rent each individual roommate is responsible for – even if they move out.
If one roommate is left holding the bag after only a few months (as in the example above), a Roommate Agreement can expedite a monetary recovery by short-circuiting the litigation process. Sure, a lawsuit to recover unpaid rent will be necessary regardless, but without a Roommate Agreement, the plaintiff will need to present evidence demonstrating how the rental obligations were intended to be divided among the roommates. If only one roommate paid the landlord and the others reimbursed him or her in cash, it can be difficult to show. In contrast, a Roommate Agreement essentially converts an action for contribution into one alleging a Breach of Contract. The evidence needed to demonstrate how rent payments were to be divided is apparent from the face of the Roommate Agreement, limiting the need for other evidence and limiting defenses that might be raised. This will save both money and time.
In short, if you have kids heading off to live in an off-campus apartment this school year, consider having them execute a short Roommate Agreement. Doing so is a precaution that could save you valuable time and money down the road. Contact me if you are interested in having a short Roommate Agreement prepared.
NOTE: This information should not be considered a comprehensive discussion of Roommate Agreements or residential lease obligations, nor should it be construed as legal advice.