Verella’s Round-Up: Employee and Caretaker Leases

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Category: Latest News

verella osborne

Verella Osborne, President, Legal Document Management, Inc.

Winter, 2020

Do you provide an apartment for your building manager or janitor as part of his/her employment? Or, in this aging population, do you rent to an elderly or disabled tenant who has a live-in caretaker? While the first scenario is common to mostly larger management companies, the second is becoming commonplace for all landlords. What happens when the employee quits or you fire him? What happens if your elderly tenant dies and leaves the caretaker in the unit? To protect yourself in both situations, you need a custom lease for each of these types of occupants.

Regarding employees’ apartments, it is crucial that you have each employee sign a lease with the stipulated market rental (it cannot be “zero dollars”). The lease should be month-to-month. In addition, either draft a rider or incorporate into the lease a paragraph stipulating that 100% or 50% (whatever rent credit you’re providing) of the rent shall be abated, only so long as the tenant is employed or contracted by the Lessor.

Should the employment be terminated by either party, for any reason whatsoever, the landlord has two options:

  1. The rent abatement shall be voided and the market rent shall become due and payable on the first rent due-date after the employment has been terminated; or
  2. Occupancy shall terminate and the former employee shall be required to vacate the unit 14 or 30 days after the termination date. Be sure to include punitive financial damages if the occupant does not vacate per these requirements. The second option is mandatory if the landlord intends to retain the apartment only for employee use.

Regarding caretakers, in the majority of these situations, the disabled or elderly tenant is the only lessee and is solely liable for the rent. Many caretakers don’t live in the unit but move in after the tenant’s death. Live-in caretakers may be listed as legal occupants but are rarely named as lessees because they may be hired after the tenant moves in or would not meet the landlord’s rental criteria to qualify as a tenant.

It is important that landlords add a rider or incorporate into the lease special language that, in the event of the lessee’s death or permanent removal from the rental unit during the lease term, the right of the caretaker to occupy the unit shall terminate either:

  1. 14 or 30 days thereafter, or
  2. Immediately and the caretaker shall become a civil trespasser.

Of course, this presumes that the family of the deceased tenant has already removed the tenant’s property and returned possession to the landlord. It is important to note that, unless the caretaker is named as a lessee, he is not subject to the lease so the landlord will have to serve a demand notice on the caretaker in order to file an eviction suit if he refuses to vacate. Therefore, it is important to either make the caretaker a lessee and thus financially liable for the rent, or make him a civil trespasser as indicated above so that you can serve a 24-hour demand for immediate possession and file an immediate eviction suit.