How to Rent a Room to Family Members

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Even a loving, familial relationship can go south quickly when you decide to live together and money's involved. A lease or rental agreement when renting a room to family members benefits both sides. It protects you by binding your relative to paying a certain amount and solidifies other important rules that will make your new landlord-tenant relationship run smoothly. Your state has renter's rights that apply to family members who rent a room from you, even if they don't pay rent or have a written agreement.

Rental Agreement Must-Haves

Obtain a rental agreement template from an authoritative source, such as a local stationery store or a state-specific landlord website. You can also draft your own rental agreement with your family member. A good rental agreement for renting a room in your home includes the following terms:

  1. Names of all family members who will occupy the room, including their spouses; if married, your relatives should both be named on the lease.
  2. Occupancy limits that state who is allowed to live in the room, as well as the specific room or space they have exclusive use to.
  3. The rental or lease term, which is either a month-to-month rental agreement or long-term lease.
  4. Rental amount, rent due date and acceptable forms of payment; also, any grace period, late-payment fees and returned check charges that may apply.
  5. Deposits and fees, such as security deposit amount, how it can be used, and non-refundable fees, such as pet and cleaning fees.
  6. Right of entry, such as when and for what reason you may be allowed to access the room your relative is renting.
  7. Rules for potential disturbances, such as excessive noise, unwanted guests, pet rules, and prohibition of illegal activities, such as drug dealing.
  8. Repair and maintenance rules, such as alerting you to any needed repairs and your relative's responsibility in maintaining the room and the rest of the house in good condition.

Research Security Deposits

Each state has its own laws governing security deposits. If you collect a security deposit from your family member, make sure it meets your state's limits. For example, you may not be allowed to charge more than two months' rent as security in some states. Rules also exist as to where you can keep the security deposit, such as in a bank or in escrow, and whether you must pass any accrued interest on to your relative when it's refunded. States also impose timelines for returning security deposits and the procedure for deducting them from the security deposit.