Almost all would agree that if you want an income-generating business, go own a rental property. However, your success in this kind of business requires among others that you establish a good relationship with your clients. At its core, it means you have to know them.
It is a common mistake in the rental industry to interchangeably use the terms ‘tenant’ and ‘occupant’ as if they are the same. As a landlord, you should distinguish the difference between the two, especially if you want to be successful in this enterprise. Here is an article for you to know the importance of defining these two terms.
Tenant vs. Occupant: Their Difference
Knowing the difference between a tenant and an occupant is vital, especially if you have more than one resident in your rental unit.
When you say tenant, this is the person with whom you enter into a lease contract. The tenant, who signs the lease agreement, is legally obligated to pay rent and other associated fees with using your property. In the same way, the tenant enjoys the privileges and concessions you provide, such as special offers or waivers.
In contrast, an occupant is a person permitted by the tenant to reside in his leased space. The occupant could be a friend, blood relative, or romantic partner of the tenant. An occupant does not enter into a lease contract with the rental owner. Still, the occupant and tenant could have an agreement (usually verbal) to allow the former to reside in the latter’s leased unit.
Who Has the Obligation to Pay the Rent?
The tenant, who signs the lease contract, is exclusively the one who pays the rent directly to the landlord. If an occupant is residing in the tenant’s leased space, the former may only have a financial obligation to the latter and not to the rental owner.
This arrangement is called subleasing. In the rental agreement, some landlords may prohibit the tenants from letting others reside in their leased units. If the landlord allows this type of arrangement, the tenant may or may not disclose such subleasing deals with “occupants” to the landlord.
Moreover, the landlord may or may not conduct background checks on potential occupants. It matters what is on the lease contract. As a landlord, you must stipulate in the lease agreement your rental rules.
Maintenance and Repair Aspects
The tenant is solely accountable when there is damage to the unit during his tenancy. It means the tenant should cover the cost of the repair or replacement of parts therein unless stated otherwise in the contract or concession agreement. Even if the occupant causes the damage due to misuse or neglect, the tenant is solely responsible for the liability.
The tenant and occupant can negotiate regarding these matters. While the landlord can conduct minimal fixes, he is not responsible for covering the costs of damages caused by the tenant or the occupant.
Moreover, agreements regarding hosting parties or keeping pets in the rental unit can only be between the tenant and occupant. As a landlord, make sure to include in the lease contract the permissions and prohibitions to avoid confusion and misunderstanding.
Right of the Tenant to Evict an Occupant Out of The Property
The tenant is considered the leaseholder and the temporary “owner” of the rental unit he is renting. In such a case, the tenant has the right to evict an occupant living in the leased property.
However, some cases can become a legal battle between the tenant and the occupant, especially if the occupant has been living in the property for a while and does not want to leave. Sometimes, the property owner may get dragged into a dispute if he helps the tenant to evict the occupant.
Is a Member of Your Family Considered a Tenant?
Your family member, such as your sibling, child, or any blood relative is considered an occupant regardless if they are paying you or not. Remember that the tenant is the leaseholder or the individual who is a signee of the lease contract.
There is also a tenant who shoulders to pay the rent but does not live in the property—for example, a parent who rents a property for his child who is a college student. The student residing in the property is the occupant, but the parent is the tenant.
Do not get confused with the difference between a tenant and an occupant again. Remember, a tenant is the leaseholder or signee of the lease contract with the landlord. An occupant is a person allowed by the tenant to reside in the leased property. If you want to become a landlord, you must know the difference between them because it can have a legal bearing when things go awry with your landlord-tenant relationship.