Roommate Changes in Rent-Controlled Properties

If you rent to students, at some point, you’ve likely had to deal with roommate changes or the last-minute addition of a roommate to the lease. It’s stressful business, both for the property owner and the resident. Maybe the Original Tenants can’t agree on signing a lease extension together; one wants to stay, the other wants to move, so they’re in a position where they have to seek a replacement roommate. Or maybe two people signed a lease for a two-bedroom apartment, then, a week before or after moving in- surprise! A third potential roommate enters the picture. No matter the scenario, there are procedures and best practices for dealing with and documenting roommate changes. I could and should do an entire webinar on this topic, but here is some general information to get started.

Here are some tips for you, the rental housing provider:

• Don’t help your Original Tenant(s) advertise for a roommate. That’s their responsibility, and they have much more freedom with what they can say in their ads.
• Require a prospective replacement roommate, who will become a subtenant, to submit a rental application and meet your screening criteria. Failure to meet the same criteria you use to qualify all applicants is considered a reasonable objection to a proposed subtenant.
• Inform your Original Tenant(s) that, per Berkeley’s Rent Stabilization Ordinance, they cannot generate income from the rent. The total rent paid by all roommates cannot exceed the rent ceiling. An incoming roommate should pay the same amount of rent and prorated portion of utilities as the person they’re replacing.

Unless you are within the first thirty days of the original lease period, you do not add the new roommate to the lease. I repeat, do not add a new roommate to the lease if a) you have a rent-controlled property, b) at least one Original Tenant (someone who is named in the original lease) is still in residency, and c) this change in roommates occurs on the 31^st day of the lease or after. So -- what, you may be asking, do I use? Read on.

Berkeley is one of the last, if not the last, municipalities in the state of California that recognizes Original Tenants. Under Berkeley Rent Board Regulation 1013 and California Civil Code 1954.53, rental housing providers reserve the right to set a new lease when there has been a vacancy event, meaning that there has been a complete turnover of all Original Tenants and only subtenants -- people who are not named in the lease -- are remaining. Not only can you set a new lease, wherein the subtenants would become Original Tenants, but the rent under the new lease can also be set to market rate. Boom -- there’s your leverage. Sometimes, the pending increased rent results in the property being returned vacant; other times, you get a new, market-rate lease, and everyone is happy.

I almost forgot the documents! Visit the Rental Housing Forms under the Content Library tab and select The Add/Remove Tenant to Lease Agreement form to memorialize the tenant who is departing from the lease, and the Replacement Roommate (Costa-Hawkins) form, which, though it has a funny title, makes clear the Replacement Roommate/Subtenant is not an Original Tenant, and is not entitled to inherit the rent-controlled rent once the last Original Tenant vacates the property.

Would you appreciate a webinar on this topic? Drop me an email at Tiffany@bpoa.org to let me know!