No Written Lease or Renting to Family: How a Manager Formalizes It

A property manager can take over a tenancy that has no written lease, or one where the tenant is a friend or relative, and formalize it without ending it: the manager records the terms both sides already live by, puts a written Texas lease in place and carries the conversations from then on. Plenty of good rentals in Keller, North Richland Hills and Fort Worth started with a handshake. A son moved into Dad's old house. A coworker needed a place and you had one. A tenant stayed on after the lease expired and nobody bothered to renew. These arrangements work until something goes wrong, and then everybody discovers there is nothing in writing.

A property manager can take over any of them. The job is to formalize what already exists without blowing up a relationship or a tenancy that is otherwise working. Here is how that is done, step by step.

What you actually have when there is no written lease

Under Texas law, a tenant who occupies your house and pays rent with no written lease is generally treated as a month-to-month tenant on the terms you have both been living by. Rent is what has been paid, the due date is when it has been paid, and either side can end the arrangement with the notice the law requires, normally at least a month unless you both agreed to something else. The tenant still has every protection Texas gives tenants, and you still have every landlord obligation, including repairs and deposit handling.

The problems are not legal so much as practical. Nobody can prove what the rent is. Nobody wrote down who mows the lawn, whether the dog was allowed or what the deposit was. A manager's first task is to turn those unwritten understandings into a record. The tenancy exists; the paperwork does not. This is general information, not legal advice; a specific situation is a question for a Texas attorney.

Step one: document the terms you are already living by

Before any lease is drafted, the manager builds a one-page record of the current arrangement, with you and then with the tenant. It covers:

• Rent amount, due date and how it has been paid: cash, transfer, check, or nothing for a while.
• Any deposit paid, when, and whether there is a receipt or a bank record.
• Who lives there, including anyone who moved in later.
• Pets, parking, storage and any use of the garage or yard.
• Who has been handling the lawn, filters, pest control and small repairs.
• Any promises made: a rent freeze, a right to buy, a repair you said you would do.

Bank records and text messages are the usual sources, and a tenant who has paid by transfer for years has, without knowing it, built the best rent ledger an owner could ask for. The manager then confirms the summary with the tenant in a short, friendly conversation. If the two accounts differ, that is worth knowing now, before it becomes a dispute. Everything the manager does from here, including the rent collection that follows, starts from this record.

Step two: putting a written Texas lease in place

The manager offers the tenant a written lease on the current association form, with the terms from the summary carried in. The rent is normally the rent they already pay, at least for the first term; this is a formalization, not a renegotiation. The lease adds what was missing: a deposit clause, late fee terms, repair responsibilities, entry notice, pet terms and a fixed end date.

The tenant gets reasonable time to read and sign. Because the arrangement is month-to-month, an owner can also give proper notice of changed terms if the tenant will not sign, but a manager reaches for that only as a last step. Most tenants, including relatives, are relieved to have the rules in writing. For what the lease must cover, see the guide to what a Texas residential lease must cover.

The deposit: what to do when none was collected

Many informal tenancies have no deposit at all, or one that was paid in cash years ago and never recorded. The lease can set a deposit going forward, but asking a long-standing tenant for a full deposit in one lump sum can sour things. A manager usually recommends one of three approaches, chosen with you:

• Collect a deposit at signing, with the amount set by your written screening criteria.
• Collect it in installments over the first few months, recorded in the lease.
• Waive it for a trusted long-term tenant and accept the risk knowingly, in writing.

Whatever you choose, the manager records the deposit in the trust account ledger and documents the condition of the house at the time of signing, with photos. Without a condition record there is nothing to deduct against later, deposit or no deposit.

Can you hire a manager when the tenant is a friend or family member?

Yes, and it is often the best thing you can do for the relationship; the short version is in hiring a property manager when renting to a friend or family member. The reason is simple: a manager becomes the person who sends the late notice, asks about the dog and schedules the inspection. You stop being the landlord at Thanksgiving. The tenant deals with a professional who treats them exactly like every other tenant, which is what most relatives actually want once the arrangement is on paper.

Two things to settle with the manager up front:

• Rent. If you charge a relative less than market, say so, and decide whether that continues. The manager will enforce whatever the lease says, so the number has to be one you are comfortable enforcing.
• Boundaries. Agree that the tenant contacts the manager, not you, for repairs and rent questions. If your cousin calls you about the dishwasher, your answer is a phone number.

A manager will also point out any tax or insurance considerations of below-market rent to a relative, in general terms, and send you to your CPA for the specifics. The guide to renting out a parent's home covers the family dynamics in more depth.

Does the tenant have to be screened?

It depends on the risk you are carrying, and the manager should give you an honest recommendation rather than a blanket rule. A relative who has paid on time for years and whose income you know is a different case from a friend-of-a-friend who moved in six months ago and is already behind.

What a manager will insist on is consistency. If the tenant is screened, they are screened against the same written criteria as any applicant, and the result is applied the same way. If they are not screened, that decision is recorded as yours. Fair housing law does not care that the tenant is your nephew; it cares that you treat people consistently. The guide on tenant screening criteria shows what a defensible standard looks like.

At minimum the manager will verify identity for everyone on the lease and collect the occupant list, because the lease has to name who lives in the house.

Keeping the relationship intact through the change

The tenant's first reaction to a manager is often worry: am I being pushed out? The way the change is introduced decides how the next year goes. A good manager asks you to make the first call or send the first message yourself, in your own words, saying that you have hired someone to handle the paperwork and repairs so the house is looked after properly, and that nothing about their home is changing.

The manager's introduction follows: who they are, how to pay rent, how to report a repair, and when they would like to meet at the house. The lease is presented at that meeting or shortly after, with the terms the tenant already knows. Rent increases, if any, wait for the first renewal and come with the notice the lease requires. The order matters: relationship first, paperwork second, changes last.

When the tenant will not sign

Occasionally a tenant refuses a written lease, usually because they fear the deposit or the rules. The manager's first response is to find out which term is the problem and whether it can be adjusted. The second is to explain that the written lease protects them too: it fixes the rent, guarantees notice before any change and sets out exactly what you will repair.

If they still refuse, you have a month-to-month tenant and the choices that come with it. The manager can serve proper written notice of changed terms, or proper notice to vacate, and the house is then leased to a screened applicant on a full lease. That outcome is rare, and a manager will tell you well before it becomes necessary. If you are in this spot and unsure where you stand, talk it through with us before anyone sends a notice.

How Perpetual handles this

I have taken over houses where the tenant was the owner's brother, the owner's old roommate and, once, the owner's ex. The approach is the same every time. We build the one-page record of what both sides have been living by, confirm it with the tenant in person, and put the current Texas association lease in front of them with those terms carried in and the missing pieces added. Screening, if we do it, runs against the same written criteria as every applicant we place, and the decision is documented either way.

From then on the tenant calls us, not you. Rent goes through our system, repairs go through our vetted vendors and every conversation is logged where you can see it in the owner portal. We are broker-owned and local to Keller, North Richland Hills and Fort Worth, which means I can be at the house for that first meeting. See how our leasing process handles the lease itself, and ask for the written quote; every fee is on it before you sign.

The takeaway: An informal or family tenancy is formalized in a fixed order: record what both sides already do, put it in a written Texas lease, apply screening consistently, and let the manager carry the conversations you would rather not have.

Questions owners ask

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