The Paletz Law Blog

When Renting to Roommates Make Sure Your Leases Protect You

The housing crisis caused by a lack of inventory and high-interest rates is driving more and more people who, in better economic conditions, would be buying homes – to rent. This scenario has increased over the past year and entered another microeconomic stage. Depressed by inflation and a lack of housing choices, renters are increasingly choosing to sign leases as roommates, presenting another issue for landlords in managing their properties. 

This is no longer as rare of an occurrence as it used to be and online real estate sites like Zillow have announced they will now offer individual room listings at the same property. The company launched a beta-version roommate option in November 2023 before a full launch in January 2024, which currently lists 10,000 single rooms nationally. 

Zillow’s senior product manager, Lily Ferguson says the roommate option is “a way for us to expand the affordable selection to our renters, in addition to providing more optionality for landlords and homeowners, potentially, to help offset mortgage costs.” 

The recommended 30% of income on rent for the median renter is now 40.6% since pre-pandemic times, up to $79,264, according to Zillow. And despite positive economic indicators such as a resilient labor market, more and more Americans say they’re struggling in the current economy. That’s pushing more renters to search for single-room options. 

Renting apartments to separate roommates is nothing new to managers and owners of student housing.  Anyone who knows these types of property managers would be wise to ask for advice to handle the roommate option so as not to have to reinvent the wheel with your leases. 

Renting by bedroom is, in legal terms, leasing a sub-unit in the same apartment or home. Landlords need to know that if you rent individual rooms in the same property, you’ll need documents that reflect what the tenants are specifically renting and be very clear about the payment responsibility for the entire unit or individual room.

The Bottom Line: Our advice is to go into this scenario with your eyes open to understand the nuances of this type of living arrangement. You also need to make your field personnel aware of the situation so they can effectively manage the property. Further, there will no doubt be some education on the judicial level, too.