I am renting one unit to my nephew and his girlfriend at a discounted rate. Is it okay to put only my nephew on the lease even though I know his girlfriend will be moving in as well? If they break up, will she be able to stay at the discounted rate if he moves out? If they get married, do I need to add her to the lease?
As a generally rule, all adults who move into the unit at or around the same time as original occupants should be named on the rental agreement. You cannot invoke Costa Hawkins, the state law that allows for an unlimited rent increase, by creating a fiction with regard to someone who moves in at the beginning of the tenancy but you choose to leave off of the rental agreement. Indeed, both the nephew and his girlfriend are original occupants who took possession of the dwelling unit when the tenancy began if in fact they moved in together with your knowledge and consent. As such, they both should be named on the lease so as to allow you to hold each person accountable to the lease terms and covenants. In this scenario, they both have the same rights to the tenancy.
The second issue involves the lower-than-market rent that you have set for your nephew, presumably because he is a relative. The rent law allows you to petition the Rent Board to increase rent to market levels which existed at the inception of the tenancy if you can establish that, because of a special relationship between the landlord or tenant, or due to fraud, mental incompetency, or other extraordinary circumstances unrelated to market conditions, the initial rent on the unit was set very low. As such, down the road, should the nephew vacate or you simply grow tired of allowing your nephew and his girlfriend to pay the lower rental amount, you, or your successor, could petition the Rent Board to allow a rent increase to what market conditions were at the time this tenancy began by submitting proof of comparable rents (rents legitimately advertised at that time by you or other landlords for similarly sized apartments with like-kind amenities in the same or similar neighborhood) and participating in a hearing to establish that special circumstances existed when the nephew and his girlfriend moved in. To ease this burden of proof, consider drafting a lease addendum that is signed by both tenants at the time they move in which specifically acknowledges that rent is being set well below the market because of the familial relationship. You should even specify what market is for that unit. This addendum can then be used as evidence at the Rent Board proceeding should you decide, at a later time, to file and pursue a “special circumstances” petition for rent adjustment.
Finally, you do not add tenants to a lease agreement who are not original occupants, even if the subsequent occupant marries the original occupant. Thus, if the girlfriend did not as assumed above move in at the beginning of the tenancy, but instead took occupancy six months or a year after the tenancy began, she should not be added onto the rental agreement even if she marries your nephew. In that instance, she is a subsequent occupant, and in order to protect your ability to raise rent under Costa Hawkins should the nephew leave, you do not add her to the lease, you do not accept rent from her, you do not put her on any communication, and you generally run all non-emergency contact through your nephew. Provided they did not move in at the same time, she will be a subtenant and should not have any direct relationship whatsoever with you.