Help! My Tenant’s Running a Business in My Rental

Imagine travelling past your rental property, only to discover your tenant has taken up shop there – running an at-home business like catering or taking in laundry, at your expense. 
 
This situation presents many risks to a landlord:  excessive wear or damage to the property, increased costs, zoning violations, business licensing and tax violations,  irritation to the neighbors,  and the possibility that the landlord may be liable if one of the tenant’s “customers” gets hurt on the property.
 
How do you stop this situation from happening to you?  These three steps can help:
 
 
If your applicant is self-employed, be certain they have a dedicated address as their place of business.  
 
When screening the tenant, pay special attention to their profession.  Is it conducive to an at-home atmosphere?  Do they have a good reason to work at home, for instance a significantly long commute.  Are they strapped for cash or motivated to earn extra income in their spare time? 
 
Prohibit Business Use in the Lease
 
Lay down the law before the tenant moves in by providing a restriction on business use of your property in the rental lease agreement.
 
Here is a sample of the type of language you will need:
 
No part of the Premises or Common Areas shall be used for the purpose of carrying on a business, profession or trade of any kind, or for any other purpose than as a private residence.”
 
Eviction Strategies for the Problem Tenant
 
Allowing the tenant’s continued use of the rental property for a business is risky.  If the tenant will not cease the activity, the landlord have no better option than to evict. 
 
Most jurisdictions will allow an eviction on the basis of a violation of the lease agreement.  However, if your lease is silent regarding the use of the premises for business, the landlord will have to argue that they are entitled to an eviction due to
1) excessive damage or disruption, or
2) using the rental property is such a way violates the law.
 
 
This post is provided by Tenant Verification Services, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).

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 Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.

{ 1 comment… read it below or add one }

paul July 6, 2010 at 7:27 am

Hi,
My tenant rent out couple rooms to other tenants to help pay their rent. Is that legal? What is the disadvantage in my part? By the way I live in NYC

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