Home Finance: Living with Company

Living with roommates means sharing more than space.


Having a roommate can make a lot of sense, especially when you're first starting out on your own. That's because, in addition to the company the person provides, having someone else to share rent and other expenses can make it a lot easier to stay on top of housing costs. But having a roommate comes with potential financial and legal issues. And since there's a chance you and your roommate might end up having some personal problems as well, you should know where you stand legally before you sign a joint lease.

In most cases, your lease will state that you and your roommates are all "jointly and severally liable" for the rent, security deposit, and any other costs that come up as a result of renting the property. This means that you're all lessees — that's the legal term for the people who sign the lease — and you're all responsible for each other's actions. So if one of you isn't able to pay rent, causes serious damage to the place, or violates the lease in another way, the landlord can legally evict all of you, not just the guilty party. That can mean a black mark on your credit history, as well as the cost and difficulty of having to find a new place to live.


If your landlord allows it, you — or one of your roommates — can sign the lease and be the official renter, with everybody else subletting, or renting a portion of the place, from the single lessee.

Most sublets happen when one person rents part of a residence from somebody who's already living there, but there's no reason why you can't set up a sublet relationship with everyone moving in at the same time.

The advantage of subletting is that it lets you set up an official chain of financial responsibility. Say you're the sublessor, the one with your name on the lease, and your sublessee, the roommate who's renting from you, can't pay the rent. You're legally entitled to evict him or her, or to use part of his or her security deposit to pay the rent. This way, you can't legally be evicted because of something your sublessee does.


If your landlord doesn't allow subletting, you can always write a roommate contract that spells out everyone's obligations to each other as cotenants. Make sure you specify how much rent each person will pay and when it will be paid. It's not a binding legal document, but it may help you resolve disputes or misunderstandings.