Renting property is a highly lucrative business, but knowing your clients ensures success and helps you avoid pitfalls.
Many landlords use the terms “tenant” and “occupant” to refer to the same person(s), yet that shouldn’t be the case. So, what’s the deal with the tenant vs occupant labels? And how does it impact your enterprise?
A Table Of Contents For The Differences Between A Tenant And Occupant
- What’s The Difference Between Tenant And Occupant?
- Who Is Considered To Be An Occupant?
- Who Pays The Rent?
- What About Repairs?
- Can A Leaseholder Kick An Occupant Out?
- Is A Family Member Considered A Tenant?
- Who Is Served The Notice Of Moving Out?
- Differences Between Tenant And Occupant FAQs
- What Happens When A Minor Occupant Turns 18 Before The Lease Term Expires?
- Is The Occupier The Tenant?
- Can An Occupant Change Status To Tenant?
- Where Does The Security Deposit Go?
- How Does A Tenant’s Death Or Abandonment Affect The Occupant?
- Should The Landlord Get Involved In Tenant-Occupant Fights?
What’s The Difference Between Tenant And Occupant?
Good question. And the answer is critical for you to know, especially if your rental allows more than one resident.
Basically, a tenant or tenants are those who sign a lease contract with you. They alone carry the associated financial obligations, such as rent payment and repairs. On the same line, they’re also the ones who enjoy the privileges and concessions you provide, including waivers.
An occupant, on the other hand, resides in the tenant’s leased space with your permission. These could be family members, a friend, or their significant other. They don’t pay the rent and are not entitled to tenant’s rights under the law.
Who Is Considered To Be An Occupant?
This is entirely at your discretion. However, children and minor dependents are occupants by default because the law doesn’t recognize their agreement to a contract as legal and binding.
As the landlord, you have the right to deny anyone of legal age (18 years and older) an occupant status. You may designate them as tenants subject to the same screening process as the main contract signatory. This automatically makes them equally responsible for a tenant’s obligations along with the advantages that go with the status.
Who Pays The Rent?
The tenant. Even if occupants in their space pay rent to them, only the tenant is obliged to pay the rent directly to you, the landlord.
Speaking of this type of subleasing arrangement, which is rather commonplace, the tenant is under no obligation to disclose such deals to you. Your authority is limited to accepting and rejecting a person’s living on your property. So, you may not run background checks on prospective and existing occupants.
What About Repairs?
From the pre-occupancy inspection to maintenance repairs to replacement of damaged property, the tenant holds sole accountability. And yes, this rule stays even when neglect or misuse is on the occupant’s part.
Of course, you can assume minimal fixes, but negotiations beyond those should be only with the tenant. These include peripheral agreements like keeping pets, performing alterations, and hosting parties in the leased space.
These provisions must be spelled out clearly in your contracts with your tenants if only to avoid future misunderstandings that could lead to its untimely ending. Remember, it’s easier and cheaper for you to maintain old tenants than to get new ones (most of the time).
Can A Leaseholder Kick An Occupant Out?
Absolutely! As the leaseholder, the tenant is legally the temporary “owner” of the property leased. Even as you have given permission to an occupant to stay in the tenant’s space, you can’t stop your tenant from evicting any person living in their leased space.
However, there exists a caveat to this situation: when the occupant doesn’t want to leave. Many states protect the right of occupants to remain in a leased space even if you didn’t consent to their stay and especially when they’ve been living there for a while.
This could be a messy state of affairs and can potentially lead to a legal battle of leaseholder vs occupant. You may even be embroiled in it if the tenant enlists your help with evicting the problematic occupant.
As the landlord, your best solution in a legal occupant vs tenant conflict is to evict everyone living in your rental. Alternatively, you may come into an agreement with the tenant on a premature termination of your contract. This will force all occupants to vacate the premises. And if you’re still interested to take in the tenant again, then you can draw a new lease.
Another important exception: A tenant cannot evict a minor occupant.
Is A Family Member Considered A Tenant?
If you allow your elderly parent or adult child, sibling, or any relative to live in your property free of charge, then they are considered an occupant.
Sometimes, a tenant shoulders all obligations but doesn’t take up residence in your property. Rather, it’s their family member who lives there. This situation usually happens with students whose parents rent an apartment for them. In such cases, the resident is an occupant, not a tenant.
Who Is Served The Notice Of Moving Out?
Normally, a lease agreement requires both parties to notify the other ahead of time if they wish to sever the contract earlier than the expiration date of the lease term. This task relies only on the tenant. An occupant may move out any time they want.
On your end, you’re duty-bound to remind your tenant 30 to 60 days before their lease expires. If they’re not the ones living on your property, you should send out a notification by registered mail.
Differences Between Tenant And Occupant FAQs
Landlords, tenants, and occupants have asked us about their privileges and obligations when it comes to a rental. Below are some of them, so check them out. You might just learn something valuable to your business.
What Happens When A Minor Occupant Turns 18 Before The Lease Term Expires?
Normally, you don’t need to change the occupant’s status to a tenant even if they’ve already reached legal age. This is because the common lease term is 12 months, which is a relatively short time to warrant the extra work you’d need to undertake to revise a contract.
Also, an 18-year-old occupant may not stay put for long. They could go off to college in a different place or pursue independence from their parents.
Just the same, if you believe that liability could be a possible issue in the near future, you can draft a co-tenant addendum to your tenant’s lease. Keep in mind, though, that this needs the consent of all parties involved.
Is The Occupier The Tenant?
Yes and no.
The tenant is the person who signs the lease contract with you. If they live in the rental, then yes, they are the “occupier.” But if someone else resides in the space, then no, the tenant is not the occupier.
Bear in mind that an “occupier” is different from an “occupant.” Technically, a tenant can be an occupier but not an occupant. On the other hand, an occupier and occupant could be the same person, but both cannot be referred to as the tenant.
Can An Occupant Change Status To Tenant?
Yes, but it is entirely up to you. Of course, your main concern should be your legal protection and your property’s welfare.
The best way to go about it is to treat the occupant as a new lease applicant. They should undergo the same process as the current tenant did, and you must conduct the same background checks as well.
If they pass your standards and tests, you have two options on the next step:
- Modify the original agreement by adding the occupant as a named tenantTerminate the current agreement and draw up a new one with both tenants as co-signatories.
A word of caution: Should it happen that the occupant doesn’t meet your standards, and you refuse their request to be a co-tenant, you must prepare for possible unpleasant consequences.
It could be as mild as your current tenant dogging or arguing with you, or as messy as making your life difficult through late payments, and eventually, deciding to terminate the lease prematurely.
Where Does The Security Deposit Go?
If you and your tenant mutually decide to enter into a new contract, you can carry the security deposit over to the new lease.
However, if your tenant doesn’t wish to renew their lease, then you must abide by the terms stated in your contract as well as your state and country laws. Often, this money covers unpaid utility bills and property damage due to abuse or neglect.
Your tenant has the option to settle their bills and repair damages in exchange for getting their security deposit in full. Otherwise, you would need to list these items in detail with their corresponding costs.
The total will then be subtracted from the security deposit, and the remainder should be returned to your tenant. The occupant isn’t entitled to any amount in this deposit, even if they claim to have shelled out a portion of it.
Important note: If your tenant opts for renewal, and they wish to add the occupant as a co-tenant, you have to consider the other person as a new tenant. Meaning, they will undergo the application process and you will conduct a background check on them.
In this case, you need to spell out the terms of the security deposit. Will it be returned to the original tenant? If so, how will the co-tenants share the payment for the security deposit in the new lease? Or, do they agree to transfer it to the new contract? If so, what happens to it when the lease term expires?
How Does A Tenant’s Death Or Abandonment Affect The Occupant?
A property is considered abandoned when the tenant leaves for a period of time without paying rent. This abandonment period is determined differently depending on your area, so you might want to consult a lawyer on what applies to you.
In this case, you can terminate the lease and rent the space out to a new tenant. As for the occupant, they have no choice but to vacate the premises, unless they want to take over the lease. Note that the law requires you to give them ample time to prepare for the move.
The same goes for when the tenant dies before their lease expires. While the process is more complicated in this case, it has more to do with the tenant and their possessions rather than with the occupant.
As with abandonment, you may offer a new lease to the occupant. If they refuse, you have no contractual responsibility or liability to them. Thus, you can go ahead and serve them a notice to vacate the property.
Should The Landlord Get Involved In Tenant-Occupant Fights?
Disagreements are inevitable, even within families or among friends living in the same apartment. You can prevent escalations to full-blown altercations by giving each tenant printed out guidelines on appropriate behavior in your building or compound.
But what do you do when a fight still occurs?
If it’s a one-time thing, and no one was hurt or no property was damaged, you can let it go.
However, if it becomes a habit, you can talk to your tenant and explain how their actions affect the neighborhood. If this doesn’t work, serve them written notices to improve their conduct.
If this solution is still ineffective, you may serve them an eviction notice. The letters you send them will be your supporting documents.
Your lease agreement with each tenant must clearly state the occupants in the property, whether temporary or permanent. Aside from your mandate to accept or deny their presence, you can also offer visiting privileges within a time period, say, 10 to 15 days.
Occasionally, though, your tenant would have someone staying for the night or over a weekend due to an emergency or unforeseen circumstance. You may include a clause in your agreement which outlines your policies in such situations.
Taking these precautions may require extra effort on your part, but it could save you a lot of headaches later on.
So does open communication. It pays to establish a good relationship with your tenants from day one. This way, they’ll be confident and comfortable telling you everything that concerns you about their residence. After all, it still is your property.