Tenant – REIA of Oakland

So, you’re a landlord, and you suspect that one of your tenant’s “guests” has somehow transformed into a tenant themselves, without your knowledge. They’ve been staying for months in your property, and yet they’re not on the lease.

This can be a tricky situation to solve. That’s because you must allow your tenants to live peacefully on your property as part of their tenant’s rights, which means you can’t disturb or harass them unnecessarily. But it’s also your right to know if someone is staying for an extended period in your rental unit, be part of the lease agreement, and be held accountable for rent.

When you have unwelcomed residents on your rental property, they can threaten the well-being of your unit, since you won’t be able to hold them accountable for any damages they cause.

In this article, we’ll help you navigate this tricky situation and shed some light on why having unwelcome tenants can harm your rental business.

The Shift from Guest to Tenant: Why It’s A Big Deal

When you own a property and decide to rent it out, you have a particular set of expectations and agreements with your tenants. These agreements often involve things like rent payment, lease duration, and the overall management of the property. As a landlord, you have the right to control who occupies your property and under what conditions.

When a guest starts behaving like a tenant, it can cause serious complications. Let’s take a look at a few reasons why:

Unauthorized Occupancy: When a guest becomes a tenant without your approval, it means they’re occupying your property without going through the proper screening process. And every landlord knows a thorough screening process is vital for success in the rental industry. Without it, you’re faced with a security concern, as you do not know the occupant’s background or ability to meet your rental criteria.
Lease Agreement Violations: As a landlord, you have a lease agreement in place with your tenants, which outlines the rules, responsibilities, and terms of their tenancy. With unauthorized occupants, you can’t enforce the rules you laid out for your property. Add to that, you’ll also worry about potential violations beyond the property, such as noise complaints, parking violations, or HOA issues with little recourse.
Financial Implications: Guests who become tenants without your consent might not pay the proper rent amount or adhere to the agreed-upon payment schedule. This can result in a loss of income for you as a landlord, and enforcing the appropriate financial arrangements becomes challenging without a formal lease agreement.

So, the shift from being a guest to an unauthorized tenant can be problematic for landlords.

Let’s move on to the signs indicating a guest has turned into a tenant without your knowledge.

Signs You Have Unauthorized Tenants

Courts recognize various contracts to determine who is a tenant of your rental property. These contracts can include a written conversation, a written document, or a series of acts to be considered part of a lease.

However, different states have laid out different thresholds for the evidence showing a mutual arrangement for the rental unit.

#1 Extended Stay

One of the most apparent signs is when a guest exceeds the typical length of stay expected for temporary guests. If they have lived in your property for an extended period, they have likely transitioned into a tenant.

#2 Financial Contribution

Guests do not pay rent or share utility costs because they stay temporarily. But, when “guests” start contributing to rent, maintenance, or utilities, they’re considered a tenant.

#3 Belongings in the Unit

If you notice that a guest starts moving their belongings into your rental unit, they’re considered tenants. Whether they move their clothes or pets to the apartment, that’s a sign that they should start paying rent.

#4 Changes to the Property

Guests often don’t change the property significantly since their stay is temporary. If you notice alterations like new furniture, decorations, or maintenance work done without your knowledge, it could be a sign that they now consider themselves long-term residents.

#5 Change of Address

When they change their permanent address to the rental unit, you can consider guests a tenant. You may notice they are getting mail or delivery packages to your rental unit’s doorstep.

What Landlords Can Do With Unauthorized Occupants

At one point in your life as a landlord, you’re bound to deal with unauthorized occupants. The key is knowing how you can deal with the situation or avoid it entirely by having a well-written lease and thorough tenant screening. Here are five steps you can follow:

1. Include A Guest Clause In The Rental Agreement

As a landlord, include a clause in your rental agreement about guests, which outlines various factors when you can start considering a guest as a tenant. You can also include how to handle any issues with unauthorized tenants.

Having a guest clause protects your property while ensuring that your tenant knows the consequences when they violate it.

2. Reach Out to Your Tenant

The next step is to talk with your tenant and remind them of the lease terms regarding long-term guests. Use this opportunity to gather information on the names of the guests and how long they’ve been staying at the apartment. Once you address the situation with the tenant, it lets them know that you know about it and are willing to enforce the rental agreement’s policies.

Ideally, the unauthorized occupant will vacate the property after bringing this to the tenant’s attention.

3. Remedy the Situation

If talking to the tenant didn’t resolve the situation, you can send a 3-day notice to your tenants to remedy the violation or vacate the property. Once the notice period specified in the notice has passed, landlords can proceed with a formal eviction process if the unauthorized occupant continues to stay in your unit.

4. Document Everything

Keep detailed records of any communication, payments received, and evidence supporting your claim that the guest has transformed into a tenant. Having a hold of this documentation will be crucial if you need to take legal action later on.

However, as a warning, Never accept any form of financial contribution from guests or agree to accept payments. Because once you do that, you’re entering into an informal landlord-tenant agreement. Guests can become tenants with a verbal agreement, and they will have all the rights of a paying tenant, even though you don’t have a written contract!

5. Seek Legal Advice

If the guest refuses to comply with your requests or if the situation becomes more complex, it’s advisable to seek legal advice from a professional who specializes in real estate law. They can guide you through the necessary steps and help you protect your rights as a landlord.

Protect Your Property From Unauthorized Tenants

Maintaining control over your property and ensuring that guests respect the boundaries you’ve set is essential for the success of your rental business. And determining whether a guest becomes a tenant is vital to ensure your property is not at risk from unwelcome “guests”.

That’s why you have to keep an eye out for signs guests have become tenants so that you can take appropriate action and keep your property under your control.

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Nothing is worse than having a tenant who took “please feel at home” way too seriously.

While some tenants will only install their own wall decor or child safety latches on kitchen cabinets, some tenants make more permanent changes to the rental without your permission. This creates a whole lot of trouble—broken lease agreements, depleted security deposits, and costly restorations when they finally move out.

So, should tenants be allowed to make home improvements in any circumstances? Let’s look at some considerations.

Common Home Improvements to Expect from Tenants

Here are some examples of rental property alterations often done by tenants:

Painting the interior walls
Changing light fixtures
Changing appliances
Installing new locks on doors
Upgrading security systems
Changing the landscaping/garden

While these changes may be considered an actual improvement or upgrade to the property, you need to ask yourself the following questions before allowing them:

Will your tenants do a good job? They may not have the skill to carry out the project and may not adhere to safety or industry standards.
Who will pay for the improvements? They might expect a decrease in rent due to work done and materials used—even if the changes made are not up to par.
Can you reverse the renovation? It’s possible that they deviate from the purpose of the original design (e.g., laminated floors are easier to clean than hardwood, simple landscaping is easier to maintain, etc.), which could require reversals in the future.
What does the lease state? Allowing them to break agreements might lead to them pushing their luck—further ignoring other clauses beyond just home improvements.

You need to remember that your rental property is an investment—one that you should take ownership over, improve, and maintain according to your standards. Moreover, your tenants should see the importance of adhering to the contract and, ultimately, respecting you as their landlord.

What to Do If They’ve Done It Already

Should you discover that they’ve already made the improvements without authorization, here are three steps that landlords should do:

Send a written notice of the home alteration, expressing your disappointment that they did not notify or seek permission before implementing the changes. Point out the specific lease clauses that they have violated.
Warn the tenants that there should be no further changes done to the property without permission and that you’ll happily consider any changes they might still want to make.
Outline the consequences of their action. This could range from just a fair warning to requesting that they reverse the renovation made—at their expense. If the alterations are extreme, you can deduct the cost from their security deposit upon Move-Out or proceed with eviction due to lease violation.

How to Prevent Tenants From Making Unauthorized Home Improvements

As they say, prevention is better than cure. So if unauthorized home improvements have been made by your tenants, make sure to review the lease agreements. Ensure that the following lease clauses are clearly stated:

Improvements that can only be done by the landlord or with landlord’s written permission
Improvements that can be done by either party
Consequences for alterations that devalues the property

Your goal is to create a space for tenants to freely improve their living conditions while being firm and clear with the boundaries. Even if you lucked out this time and the tenants did a great job improving the home, an unclear lease will open you to future problem alterations…and your luck may just run out.

Conclusion

Every rental property will need renovations and improvements from time to time. From repairing to re-flooring, landlords need to stay on top of their rental properties and make the necessary renovations when needed.

If your property can use a bit of work and you see that the tenants are capable of doing a good job, you should have no problems allowing them to improve the space. The bottom line is to make sure that they understand the boundaries and adhere to your lease agreements, and you should be good to go.

Do you allow your tenants to make home improvements? What are your non-negotiables?

Image Courtesy of Polina Tankilevitch