My Previous Tenants Were Roommates – Who Owes Me the Money?
Posted by Bill Gray on August 6, 2009
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In most cases they both owe you. First of all, each individual over the age of 18 should have signed the lease. If this is not your policy, change your policy today. There are several important reasons for requiring all adults to sign the lease, but for this article we are speaking simply to who owes you money.
Assuming your previous tenants moved more than 30 days ago, you should now report each of them to all three major credit bureaus – Experian, Equifax and TransUnion. My article, “Tenant Moved Out – Left You Holding the Bag” explains how to determine how much, if anything, you are owed.
The next question is: How much does each roommate owe me? The answer is that they each owe you the full amount, until the full amount is paid. For example, if the move out balance was $3,000 and you had four roommates on your lease, you will report each of the four for the full balance of $3,000. Should Roommate Number #1 pay you $1,000, the balance due and reported to the bureaus would be reduced to $2,000 for all four roommates. Say a month later Roommate Number #3 pays you the remaining balance of $2,000. You would now update your report to the bureaus as “paid in full” for all four roommates. Roommates #2 and #4 paid you nothing, but since the other two paid the balance owed, they don’t owe you anything.
Think of it this way. You and I buy a car together with a joint loan, and you move away, leave me with the car and I stop making the payments. Who would be on the hook for the car? We both would, right? The bank does not care which one of us wrote the check. They would be after both of us for the money until the balance was paid in full.
Too many landlords are shooting themselves in the foot by not thinking of their rental property as a product. Oftentimes they are quick to just forget the debt and move on. Doing business this way is costing them a great deal of money each year.