A Look at Joint and Several Liability

A Look at Joint and Several Liability

medium_2232579771If you’re involved in real estate investment, we’d like to congratulate you! You’re making a potentially great choice. But you’re probably feeling the stress of such a significant decision, and Jason Hartman’s team understands that. We’re here to make your life easier, and today that means taking a look at joint and several liability as part of a residential lease agreement.

In layman’s terms, joint and several liability means that every tenant on the lease is both jointly and separately responsible for the cost of rent and any damages incurred. This means that any rent-sharing agreement exists only among tenants and is of no concern to the landlord. Each tenant is responsible for the full amount of rent.

It also means that each tenant is responsible for the conduct of the others. If one roommate throws a big party and gets a noise complaint or termination notice, every tenant gets a noise complaint and termination notice.

Legally, joint and several liability means that two or more persons are liable in respect of/to the same liability. A claimant may pursue an obligation against any party as though they are jointly liable and it then becomes the responsibility of the parties to sort liability and payment. Typically, this agreement is spelled out in the lease and then signed by any person occupying the property.

Joint and several liability clauses allow you to view all tenants in your property as a single entity. As a landlord, this can make your life much easier—and typically ensures that more trustworthy, responsible tenants occupy your income properties.

There are a number of circumstances in which joint and several liability are useful, protecting your rights as a landlord. The first is if a few tenants move out randomly, leaving some people still in the property and making it harder to find renters. In this case, everyone on the lease is responsible for the full amount. Sorting out the technicalities is their responsibility.

It’s also useful if all of the tenants trash the home and then disappear. You’ll only need to track down one person in order to get your money back.

Finally, joint and several liability is useful in communicating with tenants. If you’re coming over to make repairs, legally you’re only required to notify one tenant, then they’re responsible for communicating it to others.

If you’re looking for specific lease language, there’s a lot of examples available across the internet. You should also be aware that some states have limited the scope of joint and serveral liability, so it’s important to do research particular to the state in which you own property.

(photo credit: Caro’s Lines via photopin cc)

* Read more from Young Wealth

How to Negotiate for Anything

Learning to Share

The Young Wealth Team

young_wealth_logo_small13