February 2009: Get Real

Nice and roomie

For many of us, the word “roommate” was weaned from our vocabularies some time after college and before marriage. But thanks to the housing crisis and job layoffs, some homeowners who thought their roomie days were long behind them now find themselves considering such an arrangement in order to keep up with their monthly mortgage payments.

“I’ve heard people talk about it recently,” says real estate attorney Bill Tucker of Tucker Griffin Barnes, P.C. in Charlottesville. 

In a rush to ease their financial burden, squeezed homeowners might make the mistake of posting a want ad and praying Single White Female doesn’t come a-knockin’. Not so fast. Unlike the carefree coed days of yore, selecting a roommate now should be undertaken with careful consideration and an eye toward the law.

In other words, “think of this person as a tenant, not a housemate,” says Doron Samuel-Siegel, associate attorney at the firm. Even if the roommate is a close friend, keeping this aspect of your relationship by the books will save you money and headaches down the road.

The first thing you want to do is have a tenant/landlord lease drawn up, either by an attorney (which can cost anywhere from $300 to $500) or by downloading a more general lease from the Internet (which costs roughly $50). If the latter, make sure it’s specific to the state of Virginia, since housing laws vary from state to state. It’s not a bad idea to eyeball the most recent Virginia Residential Landlord and Tenant Act so you’re at least vaguely familiar with the latest laws.

A good lease will include clear language pertaining to when the rent and other household bills are due, and penalties if they’re not paid on time. It should also specify tenant rights (use of the TV, washer/dryer, garage, overnight guests, etc.) and obligations, with regard to smoking, pets, yard work and household chores, as well as the all-important termination clause. “This gives the landlord the right to throw the tenant out if they break the terms of the lease,” says Tucker. The more specific the lease, the less room there is for creative interpretation—one reason why shelling out big bucks for a lawyer to do it isn’t a bad idea.

Another important thing to consider, points out Tucker: Most homeowner’s insurance doesn’t cover tenants and their belongings. So if the roomie decides to light a bonfire in your kitchen, you won’t be reimbursed unless you have a landlord/tenant rider added to your existing policy. Similarly, your tenant will want renter’s insurance—which usually costs under $100 per year—to protect them and their stuff in the event of a fire, flood or other disaster.
As far as what to charge, that unfortunately comes down to what the market will bear (you won’t be able to pass off three quarters of the mortgage to the roommate!). Check the classifieds to see what other landlords/homeowners in your area are getting.

Last but not least, some neighborhoods and housing complexes prohibit tenants, so double-check the neighborhood covenants and restrictions beforehand.

By brushing up on the laws and getting everything in writing, your latest (and hopefully last) roomie experience need not be a bad one.—Jessie Knadler

Posted In:     Living

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