Keeping the (financial) peace with roommates
Steve Chiotakis: Now we turn to another possible conflict. Not at work, but at home. It’s not easy sharing an apartment with a roommate.
I can think of some horror stories. One time my roommate put a pound of ham in the silverware drawer. What a surprise that was.
Here’s something not-so-surprising: Money is at the center of a lot of roommate squabbles.
Stacy Rapacon is a reporter at Kiplinger’s Personal Finance Magazine. Thanks for being here.
Stacy Rapacon: Thanks for having me Steve.
Chiotakis: What do you do to determine if a potential roommate is, I don’t know, financially qualified to move in?
Rapacon: Well, if you don’t already know the person you’re going to move-in with, if it’s not already a friend or somebody you’re familiar with, you want to make sure you do a thorough interview with them. Just ask them a lot of questions maybe what they do. Maybe not necessarily how much they earn — that’s a little personal — but just make sure that they’re employed, they seem responsible and make sure you get along. Also, some management companies — if your landlord does this — they can run background checks on potential roommates or potential tenants. And that will include a credit check as well as a criminal record or anything.
Chiotakis: I keep hearing about something called a “roommate agreement.” Is that some sort of binding contract?
Rapacon: Well, it can be as legal or as casual as you want it to be. It’s basically just talking about — before you even move-in, before you sign a lease together — talking about how you’ll deal with your living situation. You’ll discuss how much the rent will be, when everything will be due. And if you want to legalize it, if you want to get it signed and notarized, you can do that, just in case problems escalate into a legal battle.
Chiotakis: What options do you have if a roommate, say, bails on a lease?
Rapacon: Well, that’s something you’d want to cover in a roommate agreement beforehand or just discuss casually if you don’t want to go ahead with a formal roommate agreement. Just talk about when the lease ends and any repercussions somebody will have if they want to cut out early. Maybe they’ll have to cover the security deposit that you won’t get anymore or they’ll have to help you find a replacement roommate before they take off.
Chiotakis: How would that be enforced?
Rapacon: Well, if you have a notarized roommate agreement, that you’ll be able to take to a lawyer and they’ll have to enforce it. Otherwise, a lot of this is just about trust and that is the deal with roommates, with any business relationship you have. This is really a business relationship that you’re setting up.
Chiotakis: Now, I’ve seen some websites, Stacy, that actually help people determine who should pay what in rent in some sort of roommate situation. So maybe, for a bigger bedroom or a walk-in closet you pay a little more money in rent or a better view perhaps. Does that help, do you think?
Rapacon: Yeah, it all depend son what you and your roommates decide is fair. WePay.com is a money management site that can help you decide how to divvy up the costs that you’ll share. A lot of people do agree if there is a bigger room involved, that the person taking that room should pay more. But it’s really up to you. Whatever you all decide is fair. I had a roommate once and we had a two-bedroom apartment and I wound up in the much much bigger master bedroom. I had a view of tennis courts and it was just a lot bigger, a lot nicer. I mean, not nicer, but it was a lot bigger.
Chiotakis: It was as nice as it could be in that apartment.
Rapacon: It as a great place. And she took the smaller room. But we decided not to quibble over how much each room was worth. We decided to split the rent evenly and what happened was she took over most of the common room and used it as her office space. She also ended up having a couple of dogs over all the time, which was fine with me.
Chiotakis: More roommates!
Rapacon: Exactly. But we just decided what was fair and we stuck with it. The real important thing is you discuss everything beforehand and you come to a mutual agreement and you stick by what you decide to do.
Chiotakis: Stacy Rapacon with Kiplinger’s Personal Finance. Stacy, thanks.
Rapacon: Thank you Steve.
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