Top 10 Questions for Landlords to Ask Themselves Before Leasing to a Friend

Many homeowners on the East End rent out their property for various parts of the summer season in order to recoup their carrying costs on the property and to have an additional source of income. Some even rationalize their initial purchase of their vacation home by calling it an investment property, where they plan to designate a set period of time that the property will be used for investment purposes and another limited time where it’s designated for pleasure. So when a friend asks to rent this vacation property, knowing of its availability, it may sound like a godsend: you can have an easy experience, avoid using a real estate broker, and save on brokerage fees while also helping out a friend who will love your property as you do. However, before letting your friend lease your property, you need to ask yourself: do I want to lose my friendship with this prospective tenant if the rental doesn’t work out?

If your answer to this question is that it’s completely inapplicable to you because your plan is to simply allow your friend to live at your expense and you have no problem with the financial burden resulting from the lost income stream, you should nonetheless consider possible liabilities that your friend can cause you. Beyond the liabilities of town/village code violations for noise violations, parking violations, rental permit violations, and so on, there is property damage and don’t forget feeling unappreciated when you are doing a good deed.

Regardless, all landlords should ask themselves the following questions before just jumping to the conclusion that renting to a friend is a good idea:

1. How much do you value your relationship with your friend?
Once they are paying you money in consideration of the use of property, both of you have the opportunity to have unmet expectations, which form the groundwork for dissolving a friendship. They may not pay on time, your air conditioner may break, they may not leave when the lease is over, your cesspool may overflow; the list is infinite of how friction can start.

2. Would you feel comfortable having them sign a lease?
If not, that is the first sign that renting to your friend is a bad idea. Being afraid to have a document drafted to spell out both parties’ expectations indicates that you will never feel comfortable confronting your friend if you are wronged throughout the relationship. This is a terrible springboard for beginning a business relationship.

3. Would you feel comfortable having to enforce a lease against them?
Would you evict them with a sheriff if it came to that? At the end of the day, a landlord cannot just change the locks without being exposed to a lawsuit for 3 times damages. So a landlord’s only recourse would be to bring an eviction proceeding (aka summary proceeding) and then obtain a warrant of eviction for the sheriff to forcibly remove the tenant.

4. How would you feel if they disrespected your property and your rights?
Would you feel that you had an open invitation to visit your own home?  What if they said no when you wanted to come over? How about not returning your calls when you needed to get something from the house?

5. How would you feel about having a financial transaction with a friend?
How would that affect your friendship? Would you be able to look at them the same way if they bounced a check to you? What about if they were a complainer about every bit of nonsense?

6. How would you feel about collecting a money judgment on a friend?
If they failed to pay you rent, would you be prepared to enforce that money judgment by garnishing the wages, freezing their bank account and seizing their vehicles?

7. What would you do if they had a huge party that got you a ticket for a noise / parking violation?
Would this change if you were not invited to the party?

8. How would you feel if your friend let other friends move into the home in violation of your occupancy restrictions?
If the other friend was a mutual friend of yours would that change your feelings? What if their friend was your enemy?

9. Do you maintain any private documents at the house that would cause you embarrassment if your friend found them?
Would you feel compromised if they discovered something private about you? You do know people snoop, right?

10. How would you feel if they got injured on your property?
Would you feel guilty? What if they sued you seeking compensation for their injuries? Would it matter if you had insurance? How about if you thought they were full of it?

The old adage “don’t mix business with pleasure” must have come from somewhere. While you may believe that you are somehow different or special, you aren’t. We all believe that nothing bad will happen to us and ours is a different type of friendship than any other. Wrong. Unless you are comfortable being disrespected, unappreciated, taken advantage of, restricted in your ability to tell them off based upon your friendship and financially injured, it is highly recommended to refer your friend to a real estate broker in your town or village who can help them find their own summer rental.

Andrew M. Lieb, Esq., MPH, is the managing attorney of Lieb at Law P.C. and is a contributing writer for Behind the Hedges.

Read more real estate law articles by Andrew Lieb, Esq., MPH