Ask An Expert with Sherilynn Milsom

I have a rental in Calgary that two people rented together.  They are six months into a 12 month lease and now one of my tenants wants to sublease their side of the rental agreement.  What do I need to do?  Do I terminate the last agreement and do a whole new one with the two new tenants or do I get them to put a letter together?  

First, you need the potential tenant to submit an application and you need to check all references, credit, judgments, etc. just as you would with any new tenant.

Then I would write a lease renewal or new lease with all new/current tenants rather than adding tenants to the original lease.  If you write a new lease, add a term whereby the new tenant acknowledges that the tenancy started at the original tenancy date (6 months ago) so that you are still able to increase the rent at the anniversary of the original tenancy.  If you are renewing the original lease, then you may want to add a term acknowledging the substitution of a tenant. 

The key is to be sure that a) you are still able to increase rent on the anniversary date of the original tenancy and b) you have good tenants in place.

You should also offer to do a move-in/move-out inspection.  The new tenant should not be held responsible for any damages caused by the leaving tenant.

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I have a high end house that I am renting out. A self-employed renter expressed interest and he wants to apply using his corporation name on the lease.  Is this a good idea? I know how to qualify individuals (application, pull credit, references, income verification, etc.) but how can I qualify a corporation? They say it has been in operation for 15 years.  Any tips you can provide?

The lease can be in the tenant’s personal name and still be partially used as a tax deduction.  My accountant makes an entry at year-end for me to charge rent to my corporation based on the percentage of space used. The only way to legally deduct the entire amount is if the entire space is used for business, and I’d be wary of that.  In addition to obvious potential issues, it could void your insurance as some insurers won’t allow tenants to conduct business in a residential rental. And if the tenant is planning to commit tax fraud, I wouldn’t want him as a tenant. 

Sherilynn Milsom studied business administration at both the University of Alberta and the DeVry Institute, earning her Bachelor’s Degree in Business Operations, Summa Cum Laude. After spending 10 years in the “rat race” as a manager and customer relations supervisor, she and her husband Ken realized that real estate investment was the best way to achieve financial freedom.  They spent the next several years educating themselves on the fundamentals of Real Estate. Sherilynn has built the business from simply having a few rental properties to being a major player in Alberta’s Rent-to-Own industry. She is a Mensa member as well as a member of the Real Estate Investment Network (REIN).

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