Over-Occupancy Rental Laws for Inspectors

by Nick Gromicko, CMI®

In many jurisdictions, city councils place restrictions on the number of unrelated adult tenants that may reside in a single rental residence. InterNACHI inspectors may notice certain hazards while inspecting a rental home that is housing an unsafe or illegal number of occupants, although looking for and/or reporting any legal infractions lies beyond the scope of a typical home inspection.

Occupancy restrictions exist in light of the following concerns:
  • limited parking. Overcrowded houses promote congested parking areas, impinging on neighbors and potentially reducing neighborhood property values;
  • exploitation of college students and illegal immigrants. Lower-income groups are more likely to submit to overcrowded, unsanitary living conditions;
  • rowdy parties, especially near colleges. Parties are more likely to take place in rental houses where many tenants are clustered together, increasing the likelihood of noise complaints, trespassing and vandalism;
  • compromised neighborhood character, especially in neighborhoods populated by single families and working professionals; and
  • safety. Houses are prone to wear and tear that contribute to dangers such as collapse, fire, and the spread of disease based on unsanitary conditions and/or deferred maintenance.

Over-occupancy of a residence may result in fines and criminal prosecution of the landlord, the tenants, or both parties. One city that takes a strong stance against overcrowded living conditions is Boulder, Colorado, where landlords face maximum fines for over-occupancy of $1,000 per day plus 90 days in jail. Nearby Fort Collins, Colorado, allows no more than three unrelated tenants per household under their "You Plus Two" law, and the city requires that all sellers, buyers and tenants sign a disclosure statement that acknowledges that all involved parties are aware of the occupancy limit. According to the city’s website, renters should request that this form be presented to them to sign in order to protect themselves and their landlord in the event of an investigation, which can be triggered by anyone, including suspicious or annoyed neighbors.

Landlords break over-occupancy ordinances for a very simple reason:  the more renters they can cram into a house, the more rent money they can collect. The landlord might not even pay income tax on rent paid by illegal tenants, as the rent money is not supposed to officially exist. Closets, offices and non-conforming bedrooms are used to house additional, often unsigned, tenants, while the landlord profits from an overcrowded, unsanitary living situation. The tenants may face a sudden eviction and even criminal charges if the violation is discovered.

Occupancy limits are enforced on a complaint basis, often as the result of loud parties or deficient street parking. After such a complaint has been filed, municipal inspectors are dispatched to the residence, sometimes in pairs so that their testimony can be corroborated, to determine whether the house is in violation. Their best tactic is to simply interview the tenants and hope for a confession, or count their numbers if they’re all home at the time of the inspection. Many tenants are simply unaware that they were violating a law, or have no reason to protect their landlord. Some tenants will lie, however, which complicates a municipal inspector's job, forcing them to examine the number of beds, dressers, closets, parked cars or trash bins for signs of illegal over-occupancy.  Determining the number of legal or illegal occupants and any potential legal violation falls outside the scope of a home inspection performed by an InterNACHI home inspector, however. If the house can be determined to be in violation, the municipal inspector will notify the tenants, owner and/or property manager, and may be required to file a report that is referred for legal prosecution.

Prospective landlords may purchase a house that has been declared an extra-occupancy rental house, also known as a boarding house, in order to legally house many tenants. Owners can also modify their houses so that they meet the criteria of a boarding house, although the requirements for such a designation can often be prohibitively restrictive. Landlords who also live at their rental premises can better control the nuisances that lead to neighbor complaints, in general.  Their best tactic to avoid an illegal-occupancy investigation is to comply with the law.

In summary, many cities enforce residence-occupancy restrictions in order to protect the interests of renters and neighbors from unscrupulous landlords.  InterNACHI inspectors may want to familiarize themselves with local rental-occupancy ordinances if they inspect rental properties.