Jerry Zheng, Real Estate Pro in Milpitas, CA

Risk of signing lease to single person with more people to join in later?

Asked by Jerry Zheng, Milpitas, CA Mon Jan 9, 2012

An individual with great credit want's to rental my 1600 sqft SFH and willing pay three month rent up front (1st, last and security deposit). With 300 sqft additional living space (addition w/o permission so make it 1900 sqft as total), my rent is very competitive. Obviously, she doesn't need such large space just for herself, she mentioned that her brother (with his family) would be moving a month later. I am afraid that her brother doesn't have good credit and maybe can not rent anything just by himself. Am I run into any risk if I lease it to her? What I could do to prevent/reduce the risk? She is pushing for an answer ASAP so I would really appreciate some advice. Thanks a lot!

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Nicole Fedor…, Agent, Santa Ana, CA
Sat Sep 21, 2013
Most leases have a "no sub-lease" clause that these prospective tenants would be violating. In addition, your lease should have language regarding extended-stay overnight guests.

The fact that she wants to pay upfront should also be a RED FLAG! She is trying to bait you with cash into a situation that you are not comfortable with!

Insist of a rental application from ALL prospective occupants, and trust your gut! As a landlord, as much as you want to get the place rented, its a bigger headache and more costly to rent to bad tenants!
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Michael Ford, Agent,
Tue Jan 17, 2012
Those of us in the trade with rental units are all screaming "don't do it". this is a sure fire steaming pi!e

DO NOT give this gal a lease and keys until you have a FULL rental app from the brother. If she hesitates you will know all you need to know...the brother is an undesirable tenant. i have learned that a credit report has everything i need to know who's who.

once she is in you can evict for breach but the guy will be there and you'll be stuck with him. the fact that he is unauthorized is cannot get him out except by eviction if he doesn't leave willingly. the police WILL NOT put him out if the sister says he is welcome.

persons who need answers fast are a nuisance. Her failure to plan is not your emergency. do not deviate from your placement habit...screen EVERYONE. the only time i have had tenant torture is when i have deviated from my rules.

i am sure shes a nice gal but the fact is that its your home and the deal is yours alone to approve. do not do it.

Ed's remark below has an excellent not designate monies held as "rent" call the money "security deposit". either way, you'll have the money but calling it rent limits the uses you can put it to.
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Ed Favinger, Agent, Folsom, CA
Mon Jan 9, 2012

We do property management and I've had cases like this...

I'm always nervous about this kind of situation. First of all... I would take a "double" security deposit and not take the last months' rent the way you are proposing to do. This way you have more money from her to help guarantee her performance of the rental contract.

I agree with Jim and others, get her brothers credit application and verify his situation.

Owning rental real estate does have it's risks and this might be one... maybe not...

You just need to know who lives there in case you do have to the unthinkable.. start an eviction.

I hope this helps...

Make it a great day...
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Don Tepper, Agent, Burke, VA
Mon Jan 9, 2012
Don't do it. Just (to twist the well-know phrase) don't do it.

You're correct to worry about her brother. And it's not just that he might not have good credit. There might be other issues that would lead to your turning his application down: drug use, sex offender, etc. That's too much of an unknown.

What could you do to reduce the risk? Not much. You could keep your lease the way it is, which probably says that all adults must receive approval. You could hold out for that, but what happens when, a month from now, the brother applies, you review the application, and you turn him down? She'll be angry, and might decide to break her lease. He'll be angry, and might move in anyway . . . in which case you'd have to evict him.

Besides, and I'm just guessing here: In what sort of situation might a man (with a family) need to/want to move . . . not now, but in a month? I'm guessing he's facing eviction or foreclosure. He may also be unemployed. Yes, I know lots of decent people have been foreclosed upon. But I'd, at a minimum, want to make sure that I knew everything about him. And, at this point, you don't. Now, you could always ask him (and his wife, if he has one) to complete an application now. That'd be OK; he applies now and just moves in a month from now. (Assuming his credit check and background check are OK, and so long as references from previous landlords--if that's the case--check out) Is there any reason he doesn't want to do that?

Finally, is your house big enough for all of them? At 1,600+ feet, I'm guessing it may be a 4-bedroom home. You'll have the woman who's applying. You'll have the brother and his wife. You'll have their children. You might end up with a very crowded home. Certainly, you'd have more than your fair share of wear and tear.

So, bottom line, I wouldn't do it. If you're really tempted to, then have the brother and any other adults submit an application and check it out closely before agreeing to anything. And even then, I'd probably increase the security deposit or require another month's rent . . . depending on what your local regulations allow.

Hope that helps.
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Shelli Beck, Agent, Austin, TX
Mon Jan 9, 2012
First of all anyone telling you that they will give you a bunch of money up front is a RED FLAG! High Risk! Also any and all occupants over 18 should have or go through the application screening process and on the lease or rental agreement. Furthermore if you sign a lease with this person that locks you and them in the rental for that time period and if you wanted them out before the lease is up, too bad for you. I am a property manager with Lyon Real Estate here in Sacramento and
am associated with the Rental Housing Association laws and regs. If you want more indepth info you can call me anytime.

Shelli Beck
Realtor/Property Manager
Lyon Real Estate
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John Souerbry, Agent, Fairfield, CA
Mon Jan 9, 2012
Jerry - If the person qualifies on their own and is willing to accept complete responsibility for the rent, the credit and income of other occupants doesn't matter. The other occupants need to know, however, that if the qualifying person later moves out they have to move out, too, unless they submit an application to rent and are qualified, which I believe you understand.
The concerns I would have in your position are not only how to get the brother out if the sister leaves, but also how many people would be occupying the property? If the brother has a wife and 10 kids, you may find yourself in trouble per overcrowding laws. My approach would be to put everyone on the lease from the start, or find another tenant.
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Jim Walker, Agent, Carmichael, CA
Mon Jan 9, 2012
Brother can fill out an application as well, Fax it to you, or email it you, along with income verification etc. if he is out of area now, that may mean that he will have to get a new job when he gets here unless he is being transferred by his company. I like to see utility payment receipts and rental history as they are good indicators when someone does not have a credit history.

I think what you are worried about is that good credit Sally will have unknown factor brother Sam move in, then she herself will move out and claim no responsibility since Sam is your new tenant by inheritance. There are no guarantees that Sally will be good and none that Sam will be bad. She could have done this without notifying you ahead of time and you would not know of a problem unless a problem developed. Since this is her plan, disclosed to you, she should have no argument with you about getting you the brother's information, even if he is not stellar.

Was there something she said to lead you to believe that he is not credit worthy? * Just because she sees herself as helping him out does not mean a mark against him. He might be a good tenant too. As you said, it is a big enough place. Give him the chance to apply.

*The red flag on this depends on how your meeting went with her, when did the brother story come up? Was she open about it from the get go, or did it only come out after your probing questions? Did she seem evasive?
When she spoke of her brother did she talk about him like a sister who loves her brother and is proud of him, or did she sound a wee bit embarrassed about him? You were there. None of us trulia sideline busybodies were.

Rentals at fair market value are in high demand. That, and her own timeline can explain her need for a quick answer. Ask for his documented information and then make a fast, prudent, and fair decision.
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John Arendsen, Agent, Leucadia, CA
Mon Jan 9, 2012
Jerry, INTERVIEW, INTERVIEW, INTERVIEW. You are perfectly within your right to require any/all tenants to pre qualify and I certainly would never rent my home/s to someone I didn't first have an eyeball to eyeball with. Right now the balls in your court. Once you turn the keys over you've lost a lot of control. Also how big is her brother's family? what if he has 6 kids, 3 dogs, two cats and a gold fish? Proceed with caution.
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Ute Ferdig -…, Agent, New Castle, DE
Mon Jan 9, 2012
This is really no different from any other rental. Additional permanent occupants can't just be added without the landlord's permission and when you are facing a situation where a whole family is being added, you are well advised to be cautious. Now is the time to ask all your questions and protect your position in writing. I would not allow the brother with family to move in without proof of credit that meets your approval. As a matter of fact, I would also want to meet the future occupants in person.
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Sergio Herna…, , Naples, FL
Mon Jan 9, 2012
If your rent is very competitive, one option is to see who else shows interest in renting your property, short of which, you can limit the number of occupants and ask for the names of the future occupants and their exact dates of occupancy, in a written lease.
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