Write Up a Lease if Your Adult Child Returns to Empty Nest
A sinking economy has long caused adult children to move back home with their parents after being unable to afford to live on their own.
Then in stormed the coronavirus pandemic.
Causing a recession on its own, the pandemic has sent adult children to their parents’ or grandparents’ homes in record numbers. Zillow reports that 32 million adults are living with their parents or grandparents as of April 2020, the highest number on record.
As if the coronavirus and unprecedented unemployment numbers weren’t stressful enough, kids returning to an empty nest may add to a family’s stress levels. Some colleges aren’t reopening in the fall and are having distance learning only, leaving more kids at home.
One way to cope with a full nest again is for parents and grandparents to draw up a lease between the parties.
Gen Z’s Effect on Economy
The outbreak has hurt Generation Z the most. The Pew Research Center reports that as of March, half of the oldest Gen Zers said that someone in their household had lost a job or taken a pay cut because of the coronavirus outbreak. That’s higher than Millennials (40%), Gen Xers (36%) and Baby Boomers (25%) who said the same.
More than 80% of the children who moved back early in the pandemic with their elders are from Gen Z, according to Zillow’s data. Many are between 18 and 25 years old.
Some are working in the gig economy, where steady work was precarious before the coronavirus. If they lost their job during the outbreak or have student college debt they can’t repay, then moving home may be their best option.
That choice hurts more than families with homes bursting at the seams. Gen Zers pay an estimated $726 million in rent each month, according to Zillow.
Those payments equal about 1.4% of the total rental market, which could be at risk if moves home become permanent. Metropolitan areas have the largest share of young renters, potentially affecting rental housing and other businesses in those areas the most.
In March and April 2020, the number of adults moving home grew by more than 2.7 million, nearly triple the next-largest two-month increase in the past five years.
Don’t Become a Hotel
So, what to do when the boomerang returns to your doorstep?
Let the kids in, of course.
Just don’t let your home turn into a hotel where you’re expected to provide food, room service, cleaning and gas money. That can make a return home is a long-term solution without consequences.
It’s your home, and you can set the rules.
What those rules should be are up to you. The point is to set some ground rules so that everyone understands what their roles are and what the boundaries are.
Write a Lease
Putting the ground rules that everyone agrees to on paper can make any problems that happen later easier to resolve. If it’s all written down, then no one should get mad when it’s enforced.
The agreement lays out what the child’s obligations are, which can give them a feeling of being in control somewhat. If they can’t share the full costs of running a household, at least they can help with physical chores that are important.
The lease terms, which we’ll discuss below, can be part of a conversation between parents and children. Ultimately, however, the final decisions rest with the parents.
Ideally, this discussion will happen before a child moves back home. If they’re already living with their parents and have put off leaving, then it’s time to discuss a lease.
What to Put in a Lease
Under this arrangement, the parent is the landlord and the child is the tenant. You still want to relate to your child as an adult, but having them live in your home again is your choice and not theirs. They should follow your rules.
Here are some things parents may want to include in a written lease with their children:
- Should the adult child pay rent?
- How much rent if they’re employed, or unemployed?
- Time period of the lease.
- Divide utility payments? List each bill.
- Specific outdoor and indoor chores for the child.
- Can they use a family car?
- Who pays for gas, maintenance and insurance?
- Can they have pets?
- Who cares for their pets and pays expenses?
- Who buys food? Can your child eat your groceries?
- Who cooks meals and what is the schedule?
- Is it a smoking or nonsmoking household?
- When and where can guests be entertained?
- Do they need help with other expenses?
The last one can be a doozy. In allowing a child to return home, especially if they don’t have a job, parents could turn into a nonstop bank. Car expenses, health insurance, student loans and college costs could all be bills they have to pay but are unable to.
Moving home can help them put off some expenses for a while, such as renting an apartment, but it shouldn’t be a long-term solution.
Be willing to negotiate any decisions. Both tenant and landlord are adults, and both should treat each other as such.