What is a Lodger Agreement?
A lodger agreement is a legal contract that outlines the relationship between a landlord and a lodger. It will usually include the rent and payment terms, the length of the agreement, and how the relationship can be ended.
The definition of a lodger agreement is as follows:
"An agreement between the landlord of a property that subdivides part of a rental or owned residence – such as a room or room and board – to provide accommodation to a renter known as a ‘lodger . ‘ The lodger pays a rent to the landlord in exchange for the private accommodation." Investopedia
These types of agreements can be very helpful to landlords in establishing ground rules for their lodgers to follow and protecting the rights of both parties if a disagreement arises later on.
A lodger agreement differs from a tenancy agreement in a number of ways:
What are the key components of a lodger agreement? Lodger agreements will not always contain exactly the same information, but will usually have the following:
Key Components of a Lodger Agreement
Having established the need for a formal lodger agreement, what should it ideally contain (besides comprehensive terms)?
1. Terms of Occupation
You must set out how long the lodger is allowed to stay with you and whether they have a right of extension to that period. It is important to state specifically and unambiguously when the expiry date is. A lodger may then refer to the written agreement at the end of the period or when arguing about rent, and it will avoid misunderstandings (and possibly disputes) later.
2. Rent
Rent, like a tenancy, does not need to be demanded; however, the lodger should be under an obligation to pay rent and not occupy the accommodation rent free. It is best practice to ensure that rent is made payable on a regular basis (for example, monthly) and in advance. You should then state when it is due, how and where it is to be paid. If the rent is not paid, appropriate action may be taken later for breach of contract. Section 4 of the Landlord and Tenant Act 1985 states that if no time period is specified, rent will be payable weekly.
3. House Rules
House rules can be beneficial to both parties if there are conditions under which the landlord would prefer the lodger not to use the room or accommodation. If a person has a room in your house but is not a lodger (for example, they are occupying the property under a contractual licence), the landlord may wish to create house rules acknowledging what the occupation covers and just as importantly, what it does not cover. House rules should be agreed in the lodger agreement by both parties and the lodger should acknowledge their receipt. The rules should be reasonable and proportionate to the circumstances. They should not prevent the lodger from the normal patterns of daily living, such as sleeping or eating in their own room. Importantly, all parties have to adhere to the rules or they risk prolonging the relationship, but also being subject to criminal action.
4. How to Terminate the Agreement
You should specify how either party may terminate the lodger agreement (whether temporarily or permanently) if the need arises in the future. You may wish to consider an agreed period of notice (avoiding friction between the parties) and the manner in which notice is served (commence court proceedings or via airstream perhaps). The rules should be reasonable and proportionate to the circumstances.
Regulatory Aspects in Lodger Agreements
When entering into a lodger agreement, it is important to consider the legal implications. Local laws and regulations may have an impact on the creation and enforcement of the agreement, and not all states have similar policies concerning lodger agreements. For example, in California, under the California Landlord-Tenant Law, a lodger who resides at a hotel is entitled to all of the same rights and protections as a tenant, such as the general prohibition against evicting a tenant without cause. Similarly, the New York City Housing Maintenance Code provides that the lodger is entitled to notice and a hearing before being evicted by any means. In fact, in New York, a lodger is entitled to all the rights granted to a tenant under the Housing Maintenance Code. These rights include a good repair of the premises, heat, water and janitorial services, a screen on each window, a sufficient number of toilet and/or bathing facilities, and a hot water supply. Further, the New York City Housing Maintenance Code provides that the lodger cannot be evicted within 30 days of providing notice to the lodger that the landlord intends to terminate the lodger’s right of occupancy. Accordingly, it is essential that landlords understand the rights granted to a lodger under local, state, and federal laws. Failure to comply with these laws may result in the lodger bringing a lawsuit against the landlord or seeking other remedies.
Preparing a Lodger Agreement: A How-To Guide
First, assess the needs of the arrangement. Consider the particulars of the lodger (e.g., relationship, possible care needs, age, etc.), rental situation (e.g., duration, covenants and obligations, payment, etc.) and other factors (e.g., whether anyone else will live in the property, what sort of provisions need to be made to the property, etc.). Discuss any issues with the lodger and come to a consensus on how these should be addressed in the agreement.
Then, draft the document itself. A lodger agreement is essentially just the rental and tenancy clauses of a lease agreement, so you can follow a template to figure out the wording and content. Simply remove any clauses and provisions irrelevant to the needs of the arrangement.
While a lodger agreement should be simple, clear and accurate, it is easy for you or the lodger to overlook or forget important details and stipulations. Therefore, it’s best to keep the document as straightforward as possible, without over-complicating any clauses or attempting to cover every possible outcome.
Should the terms of the lodger agreement require modifications after it has been presented to the lodger or you’ve already signed it, you can amend the document. As is the case with crafting the agreement in the first place, either party can propose making changes to it, as long as both are in agreement with the modifications.
Amendments, just like the initial lodger agreement, will be simple to write. These changes, regardless of how specific they are, should only concern clauses and stipulations relevant to the period of time the agreement is in effect. If you think that the amendment you may need to make will require changing specific clauses, rather than broad alterations to provisions, review the lodger agreement to see if it makes more sense to either agree to modify only the specific clauses you need to change or to end the lodger agreement and create a new one. The latter option might save you time and could potentially prove less complicated.
Sample Lodger Agreements
The following are a selection of clauses that you can use to supplement a lodger agreement, with examples of provisions that you can use for individual circumstances such as those listed below:
Short term lodger:
"For short term lodgers the landlord can request a refundable security deposit of £X to be deducted from the first month’s rent, where such terms and conditions are agreed in advance. Should there be no material damage or breach of this agreement then the landlord will return this security deposit within 7 days following the end of this agreement."
Student lodger:
"For student lodgers the landlord can request a refundable security deposit of £X to be deducted from the first month’s rent, where such terms and conditions are agreed in advance. Should there be no material damage or breach of this agreement then the landlord will return this security deposit within 7 days following the end of this agreement." "The landlord will provide X hours of broadband on a weekly basis. This may be adjusted at the landlord’s discretion . "
Professional Lodger:
"1. The lodger hereby agrees that they shall not use the premises for any illegal purpose including but not limited to the use of illegal drugs, or drink to excess. In the event that the lodger ignores the terms of this clause, this will be considered a material default and the landlord may terminate this agreement under Clause 3 (a) (iii) (Termination) herein. "2. In the event that the lodger allows a guest to stay on the premises for a period longer than 7 days, the landlord reserves the right to request an additional sum of X in return for providing the lodger with their consent for the guest to remain in the premises."
Some tips to keep in mind:
Make sure to carefully consider the specific clauses you wish to use for your lodger agreement; whether to permit short-term lodgers, students, or professional lodgers as your situation necessitates; and when assessing the limits of each lodger’s use of your property, for example whether to allow lodgers to invite visitors or guests or use the Internet connection free of charge.
Common Pitfalls in Lodger Agreements
When creating a lodger agreement, it’s essential to tread carefully and avoid common pitfalls that could lead to misunderstandings or even disputes down the line. Here are a few of the most common mistakes people make when creating or signing a lodger agreement, along with advice on how to avoid them.
Assuming a Verbal Agreement is Enough
Many people believe that if an agreement is made verbally rather than in writing, it is not legally binding. However, this is not the case – verbal or other informal agreements can be legally enforceable. That said, if you do not have a written lodger agreement, you will struggle to prove anything if the terms are contested later. It is always best practice to have a written lodger agreement to ensure that all parties know exactly where they stand.
Failing to Include or Discuss House Rules
The lodger agreement should ideally include house rules such as quiet hours, smoking policies, guests, cleaning, pet ownership, etc. Failing to discuss and document these rules upfront can lead to unnecessary conflict further down the line. It is always best to include house rules in the lodger agreement, so there are no surprises for either party.
Using the Wrong Type of Tenancy Agreement
Lodge agreements are not tenancy agreements, rather they are licenses. Although they share some similarities, licenses are more robust in terms of the flexibility they offer landlords and landladies. It is crucial for landlords to ensure they use a lodger agreement and not a tenancy agreement. If landlords get this wrong, they may lose the right to evict their lodgers quickly and easily, as they would with a tenancy. This can happen when properties are rented out on a room by room basis, for example, which is also known as "HMOs." To minimise confusion, landlords need to be clear about the relationship they’re creating with their lodgers, and having a lodger agreement in place can help.
Failing to check In with Lodgers Regularly
In order to foster good behaviour from lodgers, it is important for landlords to check in with their lodgers. If communication is sporadic, this can lead to misunderstandings – and even tragedy – especially if the lodger is vulnerable. Checking in with your lodger once every few days can help to prevent nasty surprises for both parties.
Lodger Agreement FAQs and Answers
You will have many questions relating to a lodger agreement and here are some that may help you:
Can you put the rent up?
Yes, if the lodger is in the property for longer than a year.
What happens if there is a dispute between landlord and lodger?
As noted above, Crown has mediation services for clients. Also, the Disputes Tribunal will hear money issues. For real estate issues, a tenant may apply to the Tenancy Tribunal.
What if the owner wants to visit the property?
If the owner wants to live in their own home, they can do so any time. They should tell the lodger in advance so as not to intrude.
What if the lodger wants company overnight or even a few days?
The owner and the lodger should discuss their expectations when they sign the agreement in the first place, so that there is no confusion later on.
Can I claim for damage to my possessions caused by my lodger’s friends?
No. Unless you specifically realised the potential and covered it in the lodger agreement, you cannot claim from your lodger because your possessions were damaged by their visitors. You can only claim for damage that your lodger accidentally caused to your possessions.
What if one of us wants to leave the lodger agreement – can we do that immediately?
Each of you should give the other 28 days notice. You must still pay your rent in that time.
How to Secure a Fair and Square Lodger Agreement
In this guide, we explored the features of lodger agreements; the differences between licence agreements and tenancy agreements; and discussed template agreements that can form the foundation of any bespoke contract. Among those bespoke contracts, we also offered a warning against template agreements found on the Internet. Our guide has provided advice on key considerations while drafting a lodger agreement. A lodger agreement does not need to be a long and complicated document . But with the advice above, it should form a clear and comprehensive record of the expectations and obligations to which you will be held.
Having completed your final agreement, you will have an opportunity to clearly set out expectations to avoid the need for any potential conflict. The landlord-lodger relationship is inherently less formal than other landlord-tenant relationships, so it is important to maintain open lines of communication and to build a positive relationship from the offset.