Don’t Accept Rent from Subtenants

Posted by wasserman

I have two tenants in one of my units, only one of whom is on the lease. When a recent rent payment was due, I accepted payment from them both, though the tenant who is not on the lease did not pay all the rent that she was supposed to. From now on, can I request that rent only be paid by the tenant on the lease?

It depends. If both tenants moved in at the same time, they are likely co-tenants. Regardless of whether or not you placed one on the lease and left the other off of the lease, if in fact they both assumed occupancy with your knowledge at the inception of the tenancy then they both have equal standing as tenants and you probably have to accept rent from either or both of them.

Conversely, if the tenant not on the lease is a subsequent occupant, meaning she moved in after the lease holder, then you might be able to reject her rent payment. However, there are several factors that need to be considered. One, do you regularly address letters or email communications to this person? Have you regularly accepted rent from her in the past? Do you process non-emergency repair requests from her? Did you run her application and credit when she moved in? If the answer is “yes” to some or any of these questions, the non-leaseholder, while not listed on the lease as a co-tenant, might have been elevated to this status by your actions. If so, then you likely cannot deny her rent tender.

If, on the other hand, you never acknowledged this person before but made a mistake last month by accepting rent from both occupants, you should moving forward revert back to accepting rent only from the named lessee. This question is important because, under a state law known as the Costa Hawkins Rental Housing Act, a landlord may raise rent beyond rent control limitations when the last original tenant on the lease no longer permanently resides in the apartment and the occupants remaining behind are lawful subtenants. However, the Rent Board takes the position that the ability to raise rent under Costa Hawkins can be vitiated if the landlord “waived” the benefits of the law by making the subtenant a co-tenant at any time while the original tenant is in occupancy. This means that acceptance of rent from the subtenant, communicating directly with the subtenant, or doing anything which would lead the subtenant to believe that she has equal standing with the named lessee might create waiver. Thus, subtenants who receive a Costa Hawkins rent increase notice when the named tenant vacates often file a petition with the Rent Board challenging the landlord’s ability to raise rent, and waiver is usually their primary argument. If waiver is found to have occurred by the Rent Board judge, then the landlord will be precluded from raising rent to market and the subtenant is allowed to keep the old rent in place. A one-time acceptance of a rent check while the original tenant is in occupancy may or may not establish waiver depending on the overall facts of the case, but certainly repeated rent acceptance will be problematic for you down the road should this person who is not on the lease remain behind after the one who is on the lease leaves.