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Parents may rent out room in their home but seek ‘informal arrangement’

Question: My parents recently retired and live on a fixed income. They want to keep living in their home of 30 years. One idea they have is to rent out a room in their home to defray some of their living costs. They indicated they don’t want to get “too formal” about the arrangement. Do you have any suggestions?

Answer: Although your parents might like to see this as an “informal arrangement” to defray some of their costs, inviting a tenant in your home should be treated like any business contract. Your parents are becoming “landlords,” according to the California Civil Code, with its own set of rights and responsibilities.

At a minimum, the following information must be in writing and be provided within 15 days of entering into an oral agreement and once a year, within 15 days, if requested by the tenant (CC 1962).

This information is 1) the name, phone number and address of the manager, if any; 2) the name, phone number and address of the owner or someone authorized to accept service of process and all notices and demands from the tenant; 3) the name, phone number and address of the person authorized to receive rent if rent may be paid personally, including the days and hours that person will be available to receive payments and the form in which rent may be paid, such as check, money order or cashier’s check.

However, we strongly recommend that the terms and conditions of a rental tenancy be in writing so that all parties have a clear understanding of what is expected. Relying on memories of oral agreements leaves too much room for misunderstandings and disagreements that can ruin the relationship or result in legal disputes.

If your parents realize that a written agreement covering all relevant terms does make more sense, they should not rely on the type of rental agreement forms from many Internet sites and stationery stores. These forms might be out of date or fail to reflect specific California requirements. Nolo Press has forms that are reliable, very easy to use and up to date (www.nolo.com).

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About National Realty Group

National Realty Group was founded in October 1991 by Jeff Maas. It started as a two man office but soon grew to a medium sized office. One of the original agents formed a new home development company soon after. Steven Walker Homes is now a large national home builder. Southfork Mortgage Company Corp. was founded in April 1990 by the owner of a large home builder. Jeff Maas stepped in as its Broker in September 1993. With the help of Jeff Evens, Jeff Maas was able to expand the company. In July 1994, the owner of Southfork retired and Jeff Maas and Jeff Evens purchased the company. They continued the growth and soon built it into a multi-million dollar corporation. National Realty Group remained separate until Jeff Maas sold it to Southfork Mortgage in 1996. This allowed the owners to expand National Realty Group while allowing its agents to provide mortgage services to their clients. In 1996, a branch office of Southfork and NRG was opened in San Bernardino. It was later moved to Redlands in the most well-known office in the city. In 1998, they opened an office in Temecula in the Temecula Valley Bank office. The offices were expanded and closed 45 million in real estate and loan transactions in 1998. In 1999, Jeff Maas purchased the company from Jeff Evens becoming sole owner and broker. Shortly after the name was changed to National One Mortgage Corp. The company outgrew its 3000 square foot office in Riversideand moved to a building of approximately 6000 square feet. The growth continued at a spectacular rate. The company grew to over 40 agents within one year. The expansion continued with the addition of 2800 square feet and later adding more space for a combined total of nearly 13,000 square feet. At our peak we had over 125 agents and 12 employees in the Riverside office alone. During the summer of 2003, we opened an office in Temecula at the corner of Rancho California and Margarita. This office was soon bursting at the seams with 42 agents and 3 full time employees. Due to the increased demand for our unique programs, by the public and real estate agents, offices were opened in Corona and Ontario in early 2005. The year saw more amazing growth with offices opening in Moreno Valley, Hemet, Las Vegas and Norco. Rancho Cucamonga and Phoenix opened the first part of 2006. A Murrieta office opened summer of 2007. The economy has not been kind to many real estate and mortgage companies. We have remained strong and successful. Our business model of a One-Stop Shop provides the exact service and convenience the Home-Buying public desires and needs.

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