Updated August 30, 2023
A family member lease agreement allows a person related by blood or marriage to pay rent while living in the same household. The agreement allows both parties to live together while outlining their responsibilities and maintaining their rights as a landlord and a tenant. If the family member acting as the tenant violates any part of the lease, the acting landlord can give the same eviction notice in accordance with State law.
Table of Contents |
How to Rent to a Family Member (7 steps)
- Decide the Type of Lease
- Outline the Private and Common Areas
- Outline the Responsibilities
- Negotiate the Rent
- Who Pays What
- Termination Rights
- Sign and Move In
This is a guide on how to rent a room in your home to a family member. If the family member acting as the tenant is renting an entire residence then the standard lease should be used.
1. Decide the Type of Lease
The parties have to decide which type of lease is going to be signed. If it is a lease with a start and end date then it will be fixed. If the lease is going to be on a short-term arrangement, or if it’s unknown when the family member will move-out, month-to-month tenancy is better.
Conclusion: If the family member moved back home because of a job loss or related, it’s best to select a month to month agreement.
4. Negotiate the Rent
Commonly the largest payment in a lease is the monthly rent. Although, with the common occurrence of children moving back home with their parents rent being paid isn’t always the case. Often time the parent will forgo in exchange for being paid on the everyday expenses of the home.
5. Who Pays What
Payment of the utilities and services can be a disputed issue. Unless there is a separate meter for the family member’s unit there will have to be a percentage of the expenses to be paid. Even if an occupant of the home, for example, uses the laundry or air conditioning causing more usage of electricity.
Helpful Tip – An idea often used is to have the family member look at the average of the last 3 months and to pay the amount above the average.
6. Termination Rights
If the family member is looking for another job while living on the premises, it’s best to allow them to terminate the agreement at any time. Unless the landlord is making other long-term obligations that require the family member to stay, it’s best to allow them to leave at any time (commonly requires 30-day notice).
Common Questions
How to evict a family member?
- With a Lease – If the family member acting as the tenant does not pay rent or violates the agreement they are treated by the courts like any other tenant. Serve the noncompliant family member with an eviction notice and informing them their lease will be terminated unless they fix the issues.
- Without a Lease – The family member acting as the tenant is treated as a tenancy-at-will (month-to-month) meaning the person acting as the landlord will need to serve them a lease termination letter. The bad news is this commonly a 30-day notice.
Can Section 8 housing be rented to a family member?
Yes but ONLY IF the family member acting as the tenant qualifies as being disabled and the residential unit provided by the landlord is the only one available in the area.
Are there tax implications from renting to a family member?
No, all that is required is for the landlord accepting rent to treat the money as income and pay their share of local, state, and federal taxes.
Can you rent investment property to a family member?
Yes, as long as there are no financial obligations or liabilities related to renting to the family member it is allowed.
Sample
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