What You Need to Know About Adding Tenants to A Lease

By Aaron Swartz on June 10, 2022

So, you’ve found a tenant for one of your properties, screened them, approved their application, and they’re all moved in. Things seem to be going pretty smoothly and you’re not worried about any of the minutia of renting (apart from the normal amount of worry that comes with it). Then, your tenant wants their significant other, a family member, a friend, or anyone at all, to move in with them. What should you do? Should you allow it? Deny it? Are there procedures you need to go through? The answer to that last question is certainly yes, and to help you decide whether to add a new tenant to your property, here are a few tips to make sure the whole affair runs smoothly.

via Pixabay

Get a written request

Starting at square one, it’s a good idea to get a written request from your existing tenant to have someone else move in. This is a useful move for a lot of reasons; for starters, it gives you hard copies to keep on record as opposed to simple verbal agreements which are difficult to keep track of. Along the same line, a conversational request can also create a need for you to immediately either give the go-ahead or refuse, which can put pressure on you and lead to bad decisions. Asking for a written request can give you time to decide for yourself whether adding another person to your tenant’s existing lease is a good move for you as the renter.

Check the legal side

Before you can provide an answer to your tenant there’s one important thing you should check: can you legally add someone to the lease. All properties have an occupancy limit set by local statutes and ordinances. You cannot exceed this limit, so check whether you can legally add another occupant to the property. As a general rule, most occupancy limits are 2 people per bedroom plus one, but certain places (like New York City, which is of course famously crowded), have higher limits. Check what the law is regarding your specific circumstances.

Have the new tenant submit an application

You’re obviously familiar with the process of having a tenant apply to lease your property, and adding someone to a preexisting lease doesn’t need to be any different in that regard. Have the prospective new tenant fill out an application as you would any other person applying to one of your properties. This will give you all the most important information on them so you can decide if amending your current tenant’s lease to include the new individual is worthwhile.

Perform a background check

While it’s a simple extension of the prior point, you should absolutely perform a background check on the potential new tenant as you would any other prospective applicant. With the information from their application, you should be able to get a good idea as to whether you should accept your current tenant’s request to amend their lease.

Decide

Ultimately, it’s on you to choose whether or not to allow someone new to move into your property. Once you’ve checked your area’s occupancy limits and confirmed the legality of allowing them to move in, performed a background check to assess whether they’re a good candidate, you should be in a position to decide whether to allow someone new to enter into your current tenant’s lease. Once you’ve made your choice let your tenant know and you can begin the process of altering their leasing agreement.

Amendment vs Addendum vs New Lease

If you’ve decided to add the new tenant to your pre-existing lease, you’re faced with one more big decision: should you draw up a new lease agreement, amend the existing one, or add an addendum? There are pros and cons to all three, so here are some things to keep in mind as you make your decision.

Lease Amendment

A lease amendment is, similar to the name, a document that amends an existing lease. A lease amendment is a great choice when your existing lease needs slight modification, whether that’s to fix a minor error or adjust terms that were part of the original document. When adding a new tenant you may increase rent, utility costs, or the arrangement of how your renters are responsible for paying you. A lease amendment can be a great choice to revise smaller details on your lease to encapsulate the changes that come with adding a new tenant to your property.

Lease Addendum

While it’s a slight difference, it’s still useful to know what separates an amendment from an addendum. A lease addendum is a document added to an existing lease that contains new information or clauses; rather than adjusting old information as in an amendment, an addendum adds something new. If the addition of a new tenant alters the terms of your pre-existing lease to a large extent, a lease addendum is a great choice.

New Lease

While it likely doesn’t need explanation, drawing up a new lease agreement is an option worth considering when adding a tenant to your pre-existing lease. Addendums are an excellent choice when you need to add new terms to an agreement, but if the inclusion of a new tenant is going to alter your lease dramatically it may be better to start fresh. A new lease allows you to neatly lay out the new terms of the agreement and keeps you from having to create too many additional documents for your files. It can be more time-consuming to create, but if you’re altering your old lease drastically enough a new lease may be the right call.

Property management is a difficult business and there are always curveballs headed your way. Hopefully, you’re now prepared to make smart choices when tenants want to add someone new to their lease.

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