Dealing with roommates can be somewhat problematic if there is not a clear understanding of the issues and responsibilities involved in this arrangement.   As a landlord, it is essential that you clearly understand the nature of a co-tenancy situation and explain it to each tenant prior to signing a lease.  To further avoid co-tenant issues, it is an excellent idea to require that the co-tenants review and sign a Roommate Agreement and deliver a copy to you. 

    Another issue involves dealing with security deposits.  It is important to clarify a strict policy that the security deposit shall remain the collective property of all co-tenants regardless of how it was originally paid.  This means that when the tenancy ends, you have the right to make any refund check payable to all co-tenants (i.e. "John Doe, Jane Doe and Bob Smith"). This way, if there are any disputes over security deposit deductions for repairs, cleaning, etc., it will be the responsibility of the co-tenants to work out themselves and you can stay out of it.

    This also means that if one roommate wants to move out, and another wants to move in, you as the Landlord (after approving any such changes and creating an addendum to the lease) should not be bothered with having to refund a portion of the deposit to the old roommate and collecting the same from the new one.  Again, make it the tenants' responsibility to work out the details.  Otherwise, you are better off terminating the lease entirely, completing a formal move-out inspection, deducting for repairs or damages and refunding the deposit balance, etc. so you can start all over with a new lease for the new tenancy.  This way you eliminate the chances of damage and other financial disputes down the road.

    As mentioned above, using a good Roommate Agreement will clarify these and other similar issues that often cause problems in multiple tenancy situations.  It's an excellent policy to require roommates to review and sign one amongst themselves prior to signing the lease.  A good roommate agreement should clearly define the following issues:
 

1.   Rent. Specify how monthly rent will be shared and paid and who will be responsible for collecting those amounts and issuing one payment to the landlord on or before the rent due date.

2.   Bedrooms.  Determine how rooms shall be occupied.

3.   Condition of the Premises.  Clarify the expectations with regard to the physical upkeep of the property and the fact that all co-tenants may be held legally responsibility for damages regardless of who is the cause.

4.   Utilities.  Establish how payment of applicable utilities will be made.

5.   Guests. Clarify that each co-tenant understands that they are responsible for the actions of all guests or invitees at all times and shall not allow another to take occupancy for any length of time without the written consent of all co-tenants and the Landlord.

6.   Leaving Before the Lease Ends. Stipulate what the expectations are of a roommate who wants to leave including minimum notice, finding a replacement, and their financial obligations to the lease contract

7.   Adding a New Roommate.  Clarify that additional tenants approved by the remaining co-tenants shall be added to the rental agreement at the sole discretion of the Landlord and the vacating tenant may not be released from the lease until an acceptable arrangement is made.

8.   Security Deposits.  Make sure that all co-tenants understand that the Security Deposit is considered the collective property of all tenants.  Disputes over distributions of the deposit shall remain the responsibility of the tenants and not the landlord.

9.   Dispute Resolution. Understand that if a dispute arises concerning any aspect of the lease or the shared living situation, the Landlord shall not be involved in the remedy.

10.  Violations of the Agreement. Stipulate how lease violations will be dealt with and any remedies co-tenants have against one another in the face of repeated violations by one tenant.

 About the Author
Shannyn Flory is the author of The Complete Landlord® e-Guide and creator of www.landlordeguide.com, a site dedicated to teaching the tricks of the property management trade. She also publishes a Landlord’s Resource Directory and a free monthly newsletter at her website with essential links, informative articles and frequently asked questions.