10 Room Rental Agreement Mistakes That Will Cost You

A bad room rental agreement is worse than no agreement at all. It gives you a false sense of security while leaving gaps big enough to drive a lawsuit through.

Whether you’re a homeowner renting out a spare room or a tenant about to sign one, these are the mistakes that cause the most problems — and how to avoid every single one.

Mistakes Landlords Make

1. Using a Generic Template Without Customizing It

Downloading a free template and filling in the blanks feels efficient. But generic templates are written for generic situations, and room rentals aren’t generic. Renting a room in your own home is legally different from renting out a standalone apartment, and the template you grabbed probably doesn’t account for that.

The fix: Use a template as a starting point, not a finished product. Tools like pen.sh generate agreements based on your specific situation — room rental in an owner-occupied home, subletting a room to a co-tenant, or renting multiple rooms. The document adapts to your answers.

2. Skipping the Security Deposit Terms

“I’ll collect a deposit” isn’t a plan. Your agreement needs to specify the exact amount, where it’s held, what deductions are allowed, and the return timeline. In states like California, you’re now required to provide documentation (photos, receipts, invoices) for any deductions — and must use first-class mail unless both parties agree to electronic delivery.

The fix: Include a complete security deposit clause. Specify the amount, holding method, permitted deductions, return timeline, and the process for move-in/move-out documentation. For state-specific requirements, RoomAgreement.com’s security deposit guides break down the rules.

3. Including Illegal or Unenforceable Clauses

This one can backfire spectacularly. Some clauses landlords commonly include are flat-out illegal:

Waiving habitability rights. You cannot make a tenant agree to rent a room “as-is” with no right to repairs. The implied warranty of habitability is non-waivable in most states.
Waiving the right to sue. Clauses preventing tenants from taking legal action for negligence or habitability violations are generally unenforceable.
Discriminatory terms. Any clause that violates the Fair Housing Act — restricting tenants based on race, religion, gender, family status, disability, or national origin — is illegal. This includes things like “no children” rules (unless the property qualifies as senior housing).
Prohibiting 911 calls. Yes, some agreements actually include this. It’s illegal everywhere.
Excessive late fees. Late fees must be reasonable and proportional to actual damages. A $200 late fee on $800 rent likely won’t hold up.
“Non-refundable” security deposits. In most states, all security deposits are refundable by law. Calling it non-refundable doesn’t make it so.

The fix: Know your state’s landlord-tenant laws before drafting. When in doubt, have an attorney review the agreement. Including an illegal clause doesn’t just make that clause void — it can undermine your credibility if the entire agreement is challenged.

4. Not Defining Shared vs. Private Spaces

“You can use the common areas” sounds clear until your tenant sets up a home office in the living room, stores bikes in the hallway, or treats the kitchen as their personal domain.

The fix: Be specific. List exactly which room is being rented, which areas are shared, and any restrictions on shared space usage. Include rules for storage, kitchen hours (if applicable), bathroom schedules, and parking.

5. Ignoring Entry and Privacy Rules

As a live-in landlord, it’s tempting to think you can enter the rented room whenever you want. You can’t. Most states require 24-48 hours’ written notice before entering a tenant’s private space, except in genuine emergencies.

The fix: Include an entry clause specifying notice requirements. Follow your state’s rules even if you own the property and live there.

Mistakes Tenants Make

6. Not Reading the Full Agreement

This sounds obvious, but it happens constantly. Tenants skim the rent amount and move-in date, sign at the bottom, and discover unpleasant surprises later — like automatic renewal clauses, excessive cleaning fees, or restrictions they didn’t notice.

The fix: Read every clause. If something seems unclear, ask about it before signing. If the landlord can’t or won’t explain a clause, that’s a red flag.

7. Not Documenting the Room’s Condition at Move-In

If you don’t document existing damage when you move in, you have no defense when the landlord blames it on you at move-out. That scratch on the floor? The stain on the carpet? Without proof it was already there, it’s coming out of your deposit.

The fix: Take timestamped photos and video of every surface — walls, floors, fixtures, appliances, windows, closets. Email them to yourself and the landlord on move-in day. Some landlords provide a move-in checklist; if yours doesn’t, create your own and have both parties sign it.

8. Agreeing to Vague Financial Terms

“Utilities are split” doesn’t tell you enough. Split how? Equally? By usage? And who’s the account holder? What happens if your roommate doesn’t pay their share — are you on the hook?

The fix: Get specific numbers and methods in writing. Who pays what, by when, through what payment method, and what happens if someone misses a payment. RoomAgreement.com offers clause-by-clause breakdowns of what each section should include.

9. Ignoring the Termination Clause

How you end a room rental matters as much as how you start one. Tenants often don’t check:

How much notice is required to move out
Whether early termination triggers a penalty
What happens to the security deposit if you leave early
Whether the lease auto-renews if you don’t give notice by a specific date

The fix: Read the termination and renewal sections carefully. Mark key dates on your calendar (notice deadlines, renewal dates). If the agreement auto-renews, set a reminder well in advance.

10. Not Getting a Signed Copy

You’d be surprised how many people sign an agreement and never get their own copy. Then when a dispute arises, they can’t prove what was agreed to.

The fix: Everyone signs. Everyone gets a copy. Digital agreements and e-signatures make this effortless — pen.sh automatically provides signed copies to all parties.

Red Flags to Watch For

Whether you’re a landlord or tenant, run if you see any of these:

No written agreement at all. Verbal promises are nearly impossible to enforce.
The landlord refuses to put terms in writing. If they won’t write it down, they don’t want to be held to it.
Clauses that waive your legal rights. You can’t sign away habitability, the right to sue, or the right to call emergency services.
Unreasonable restrictions. No guests ever? No cooking? Mandatory curfews? These may be unenforceable and signal a problematic landlord-tenant relationship.
Vague or missing security deposit terms. If the agreement doesn’t specify the amount, return timeline, and deduction rules, you’re setting yourself up for a fight.
Unilateral amendment clauses. “Landlord reserves the right to change any terms at any time” is a red flag the size of a billboard.
No signatures. An unsigned agreement is just a piece of paper.

How to Get It Right

The best room rental agreement is one that:

Covers all the essentials — rent, deposit, utilities, shared spaces, house rules, termination
Complies with your state’s laws — deposit limits, return timelines, entry requirements, Fair Housing
Is specific enough to prevent disputes — dollar amounts, dates, methods, consequences
Is signed by all parties — with copies distributed to everyone

You don’t need a lawyer for most room rental agreements, but you do need more than a template pulled from the first Google result. pen.sh generates customized, state-aware agreements based on your specific living situation. Describe your arrangement, review the document, and e-sign — all in one place.

The 15 minutes you spend getting it right now saves months of headaches later.

pen.sh is not a law firm. For complex legal situations, consult a licensed attorney in your state.