Many landlords use the terms “tenant” and “occupant” interchangeably, but each has a different implication from a rental standpoint. So, what’s the difference, and how does it affect your business? Here’s an overview of how tenants and occupants are defined, as well as how to handle certain situations you may encounter with an occupant. Please note that this post is for informational purposes only and is not intended as legal advice.
The Difference Between Tenants and Occupants
Tenants are the financially responsible parties for a rental property. They’re the ones who sign the lease and are bound to the obligations named in the lease, including rent payments. Tenants also get to enjoy the amenities and privileges you provide for the property.
Occupants, on the other hand, are authorized by the landlord to live at the property; they could be a tenant’s friend, family member, or significant other. However, they aren’t responsible for paying rent and aren’t entitled to tenant’s rights under the law. If a landlord allows their family members to live on the property rent-free, they’re also considered occupants.
Some tenants may take on all the legal obligations of a property without actually living there. This is a common practice for students or elderly residents whose family members are renting out an apartment for them. In cases like these, the leaseholder is considered the tenant, and the resident of the property is considered an occupant.
It’s entirely at the discretion of the landlord to determine which individuals in a household are considered occupants—but children and minor dependents are occupants by default. This is because the law doesn’t recognize their agreement to a contract, like a lease, as legally binding. Minors may be listed as an occupant on a lease but should not be required to sign anything or be listed as tenants.
Landlords also have the right to deny any adult (18 years or older) the occupant status. Instead, they can be designated as tenants or co-tenants, which makes them subject to the same screening processes and lease terms as the initial tenant. As tenants, they’ll also be able to share the same legal advantages that go along with the status.
You may also have seen the term “occupier” used, which is different from “occupant. If a tenant (the person who signed the lease) lives in a rental property, they’re considered the “occupier.” If someone else lives in the space, the tenant is no longer considered the occupier. To sum it up, a tenant can be an occupier, but not an occupant; an occupant can also be considered an occupier, but cannot be referred to as the tenant.
Who’s Responsible in Subletting Situations?
What if the occupant pays the tenant rent for living at the property? The tenant is still the only one obligated to pay rent directly to the landlord. In subleasing situations, the tenant isn’t under any obligation to discuss their arrangement with you. The landlord’s authority is limited to only allowing (or denying) occupants from living on your property—so you cannot run background checks or other types of screenings on prospective or existing occupants.
Tenants also hold sole accountability when it comes to things like pre-occupancy inspections, maintenance, repairs, and replacing damaged property. If an occupant damages, misuses, or neglects the property in some way, the tenant is still the responsible party.
In addition, all repairs and maintenance discussions should stay between the tenant and the landlord, as well as any negotiations about the property, like performing upgrades and keeping pets. All provisions should be clearly laid out in the lease to prevent misunderstandings.
Kicking Out Occupants
Once a tenant signs a lease, they’re considered the legal “temporary owner” of the property. This means they’re well within their legal rights to kick out an occupant as they see fit—as long as the occupant isn’t a minor. Although the landlord granted the occupant permission to live there, they have no authority if the tenant wants the occupant to move out of their leased space.
If the occupant doesn’t want to leave, however, the situation can become more complicated. Many state laws protect the right of occupants to live in a leased space, even without the landlord’s permission—and especially if they’ve already lived on the property for a while. Unfortunately, this could potentially lead to a legal battle between the leaseholder and the occupant. Landlords who get pulled into a legal tenant vs. occupant dispute are often best off evicting everyone in living the rental. As an alternative, though, landlords may be able to get the tenant to agree to early lease termination.
When the Lease Ends
Lease agreements require the leaseholder or the landlord to notify the other party ahead of time if one of them would like to terminate their contract. This is only required by the tenant; an occupant can move out whenever they like. Landlords are required to notify their tenants 30 to 60 days before the lease expires. If the tenant is living on your property, you can deliver this in person; otherwise, the notice should be sent via registered mail.
When Minor Occupants Turn 18
If a minor occupant turns 18 before the lease ends, you generally don’t need to change their status to tenant. Since a typical lease lasts 12 months, you would need to do some extra work to revise the contract. If the change is needed, it’s best to wait until the lease renewal for the revision. Another thing to consider: depending on the situation, an 18-year-old occupant may not plan to stay at the property for very long. They may go off to college or decide to move out into their own residence.
However, if you think they could become a liability in the future, you could add a co-tenant addendum to the lease. If you choose this option, make sure to discuss it with all parties and get their consent before making any changes.
Changing an Occupant’s Status
What if an occupant decides they want to become legally responsible for the property? Landlords can change an occupant’s status to tenant, if they wish. In this case, it’s best to treat the occupant as a new lease applicant. Use the same process and screening methods as you would for any rental applicant, such as running a background check and credit check. If they’re approved, you have two options:
- Modify the original lease by adding the occupant as the named tenant.
- Terminate your current lease agreement and create a new one with both tenants listed as co-signers.
Keep in mind that if the occupant doesn’t meet your rental standards and you refuse to change their status to tenant or co-tenant, it could create resentment or other unpleasant issues.
Handling the Security Deposit
If your tenant and you decide to renew the lease, you can carry over the security deposit to the new lease. If you or the tenant doesn’t want to renew the lease, you’ll need to refer to the security deposit terms in your lease, as well as state and local laws.
Tenants have the option to pay for any damage or replacement items in advance in exchange for getting their security deposit returned in full. Otherwise, you should perform a thorough inspection and create an itemized list showing each of the charges and what they include. Then, subtract the total from the security deposit; the remainder will be what’s owed to the tenant—not the occupant.
If the tenant decides to renew the lease and add the occupant as a co-tenant, you’ll need to determine the terms of the security deposit. It may be best to have a discussion with both parties to determine how they would like to handle it, then write up the new terms.
When a Tenant Dies or Abandons the Property
If a tenant leaves a property for a period of time without paying rent, the property is considered abandoned. Refer to your local laws to see what’s considered abandonment in your location, or consult with a lawyer.
Once a property is abandoned, the lease can be terminated and the landlord can start the process of renting the property out to a new tenant. If the occupant is still living there, they must either leave the property or take over the lease. Keep in mind that if you want them to leave, you’ll need to provide proper notice in accordance with your local laws.
The process is similar when a tenant dies before the end of the lease, although it can be more complicated because you’ll need to determine what to do with the deceased tenant’s belongings. You’ll have the choice of offering a new lease to the occupant or serving them a notice to vacate.
Tenancy At-Will
Another type of tenancy you may encounter is called “tenancy-at-will”. This involves a verbal rental agreement between the landlord and tenant allowing the tenant to occupy the property; there is no written lease or rental agreement, and the tenancy can be terminated at any time by either party. Tenants and landlords may enjoy the flexibility of this type of agreement because it allows either party to change rental situations easily without breaking the contract.
If you’d like to terminate a tenancy-at-will, it’s recommended you check your state and local laws; depending on where your property is located, the laws can vary significantly. For example, to terminate a tenancy-at-will in California, the landlord must serve the tenant with a 30-day Notice to Vacate. If the at-will tenant fails to leave the property by the date specified in the notice, the landlord will need to start the eviction process.
However, in Nevada, the law requires a five-day Tenancy-at-Will Notice informing the tenant that the tenancy-at-will is ending and instructing them to leave. If the tenant refuses to leave, they must be served with a second five-day Notice to Quit for Unlawful Detainer after the first notice period has elapsed. This notice informs the tenant that their presence is now considered unlawful. It’s important to note that the landlord cannot serve these notices themselves; the notice must be served by a constable, sheriff, licensed process server, or an agent of an attorney licensed in Nevada. If the tenant remains on the property after the second notice has expired, they will need to begin the eviction process.
Disagreements Between Tenants and Occupants
Living with others can be tough and disagreements are inevitable, even among the closest friends or family members. One way to prevent getting sucked into tenant/occupant squabbles is to provide tenants with a printed guide on appropriate behavior when living at your property.
If a fight happens, and there was no damage to the property or physical injuries, you may be best off ignoring the matter. If fighting becomes a regular occurrence, talk to your tenants and explain how their conduct affects others in the neighborhood or complex. If fighting continues to be a problem, you may want to send them a written notice asking them to resolve the issue—or you’ll be forced to consider eviction.
Conclusion
Understanding the difference between tenants and occupants is essential for establishing who has legal obligation to the lease agreement. By having a firm grasp on who’s considered a tenant and who’s an occupant, you can prevent confusion and ensure you’re conducting your business and rental processes accordingly.
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