As a property owner, part of looking out for your rental property business is well-informed awareness of who you are dealing with. Although mistakenly used interchangeably, there are significant differences between a legal tenant and an occupant that you must watch out for to protect your company.
The legal tenant
In New Jersey, rental agreements must outline your rights and responsibilities as a landlord and that of your legal tenant. While you have the right to collect rental payments on time and the commitment to secure upkeep and other minimal fixes, a legal tenant also has rules to follow.
- Financial obligation to pay rent directly to the landlord as stated in a signed lease agreement
- Sole accountability for pre-occupancy inspection, repairs and maintenance, as well as damages by their occupant
- Prerogative to sublease to an occupant without discussing such arrangement with the landlord
- Preservation of a safe and sanitary unit
- Observance of good conduct and healthy relations with other tenants or neighbors
- Entitlement to use amenities and other privileges within the property
- Management of security deposit in case of either a renewal or termination
There are cases when the legal tenant only takes care of the rental fee for their chosen occupant. The legal tenant is still the leaseholder, even if the occupant is the unit’s resident.
Simply put, the occupant is anyone living in the property without the financial obligations of a legal tenant. Children or minor dependents are automatically occupants because they do not have the authority to be lease contract signatories.
Although you can allow an occupant to stay at your legal tenant’s leased space, you cannot prevent your tenant from evicting their occupant. However, this is not the case if the occupant is a minor. Additionally, it becomes a headache when a tenant vs. occupant scenario occurs while you are in the middle of the storm as the landlord. You must take time to review your options before entering any legal battle.
Renting out your residential property remains a lucrative business in a consistently growing industry. Having a well-established lease agreement and knowing which individual is accountable will save you and your clients from future legal troubles.