What is a Family Member Lease Agreement?

A family member lease agreement enables a person connected by blood or marriage to pay rent while residing in the same household. This agreement facilitates cohabitation while delineating the responsibilities and rights of both parties as landlord and tenant. If the family member, acting as the tenant, breaches any clause of the lease, the landlord can serve an eviction notice in accordance with state law.

How to Rent to a Family Member (7 steps)

1. Choose the Lease Type:
   
   The parties must decide whether to opt for a fixed-term lease or a month-to-month arrangement, depending on the expected duration of occupancy, such as for short-term or indefinite stays.
   Opting for a month-to-month agreement is advisable if the family member’s return home is due to circumstances like job loss.
2. Specify Private and Shared Areas:
   
   Details regarding shared or individual bedrooms and access to various areas like parking spaces or balconies should be clearly outlined in the agreement.
3. Define Responsibilities 

   Similar to a roommate agreement, responsibilities such as cleaning duties, grocery arrangements, and rules regarding smoking or drinking need to be explicitly stated.

4. Negotiate Rent
   
   Negotiating the monthly rent is crucial, though in cases where adult children move back in with parents, rent payments might be waived in exchange for contributing to household expenses.
5. Allocation of Expenses
   
   Determining who will cover utilities and other services is essential. Unless there’s a separate meter for the family member’s unit, a fair percentage of expenses should be agreed upon, considering factors like laundry or air conditioning usage.
   Helpful Tip: A common approach is to calculate payments based on the average of the past three months’ utility bills.
6. Termination Clause
   
   Allowing the family member to terminate the agreement at any time, especially if they’re actively seeking employment elsewhere, is advisable. Unless there are specific long-term obligations, a standard notice period, typically 30 days, should suffice.
7. Signing and Moving In 

   Once the terms are agreed upon, both parties, the landlord and tenant, should sign the agreement. Any upfront payments, such as security deposits or first month’s rent, must be settled before gaining access to the property.

Common Questions about Family Member Lease Agreement

How to Evict a Family Member?

• With a Lease: Noncompliant tenants, including family members, can be evicted through proper legal channels, such as serving an eviction notice and providing an opportunity to remedy the issues.
• Without a Lease: In the absence of a formal lease, termination of the tenancy typically requires serving a notice, commonly a 30-day period.

Can Section 8 Housing be Rented to a Family Member?

• Yes, but only if the family member qualifies as disabled and if the residential unit provided by the landlord is the sole available option in the area.

Are There Tax Implications from Renting to a Family Member?

• No, as long as the landlord treats the rental income as taxable and fulfills their tax obligations at the local, state, and federal levels.

Can You Rent Investment Property to a Family Member?

• Yes, provided there are no financial or liability issues associated with renting to the family member.