Top 5 Reasons to Avoid the Hollywood Lease

Ah, the Hollywood Lease. You know the type of arrangement I'm talking about. It's that situation where a large group of young hopefuls with more dreams than income and more good intentions rather than good credit get together to share a large rental property to mitigate some of the high costs of rent in the big city. Sometimes these groups are as small as three or four, and sometimes there are over a dozen. It's certainly not unique to Hollywood, California - but it happens there more often than it happens anywhere, and with much higher stakes and greater consequences.

But while on it's face, it seems like a great way to live in a great property at a much lower cost, it turns out to usually be a very bad idea. Here are the top 5 reasons why:

5. You don't really want five (or more) roommates. You've had bad roommate experiences before, and it always starts out great - everyone's being nice and considerate and fun, and then all those problems you always start to have begin, except now they're multiplied by each new person. Turns out there is actually something to be learned from watching The Real World - putting a bunch of twenty-somethings in a house together always ends badly.

4. You're jointly and severally liable for the lease if your name is on it. In most Hollywood Lease situations, the landlord demands that all the tenants' names are on the lease. This is not just so he/she will know who's there. There is likely a provision which makes each tenant responsible jointly and severally liable for the rent. What does this mean? Well, let's just say that the rent is $2,000/month. Legally, each of the tenants owes that $2,000 monthly... and you work out how it actually gets paid amongst yourselves. This actually makes sense, the landlord shouldn't be responsible for that one guy who is always late with his rent. But it also means that if all your new friends move out without telling you, guess who owes rent on their own next month?

3. There's no legal agreement between the tenants. Sounds silly, right? I mean, you're just roommates! You're not starting a company or opening a restaurant. Why would you need some sort of documentation governing the relationship between all of you for business purposes? How do utilities get divided? What if you don't watch the cable? And if someone wants to move out early? Well, when these things start to drive things south (and they will) because there's no agreement it's jungle law: survival of the fittest, or more likely, victory by those with the least to lose. If you're the person with the best credit, most stable job and richest parents, guess who will end up giving in? Oh, and guess who has little or no legal recourse?

2. You don't want that landlord. Listen, renting to a rag-tag, unrelated group of good-looking hipsters is maybe the worst thing you can do for your property if you're an owner, so there's a reason he/she is renting it to your group. Maybe the price is higher than they can get from a single family, maybe it's in a terrible part of town, or maybe the property isn't quite as nice as it appears. The insulation might be terrible and the utilities insane; the neighbors might be loud and crazy; there might be black mold in the walls. Or maybe the landlord has a history of scamming tenants or using the property to hide drugs/other contraband (all things that have happened in these types of houses).

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1. Beware being the "last one". Often times these groups are groups of friends that are one or two people short of the property they're looking to get into, and they go looking for the perfect "mark" to bring in to help them complete the transaction. They even tell you they're looking more for a new friend to bring into the fold than another roommate. But when things get bad (and they will) guess who will be the first one thrown under the bus? When there's a plan to move out without telling the landlord, guess who won't get told? Guess who will be out of town for the weekend when it happens? These people are not your friends and they know that better than you do. In renting, just like in fighting, if you're way outnumbered you're way screwed.

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Like most things: if something sounds too good to be true, it probably is. Such is the case with the Hollywood Lease. It's an amazingly bad idea that masquerades as an amazingly good one. It preys on our desire to believe that our peers are inherently good people, especially if they're good-looking, similarly interested as us and initially charming. Unfortunately, these are usually much better indicators that we won't get along with someone.

In the end, I can't think of a good reason to get into a Hollywood Lease. Socially and legally, it's a disaster waiting to happen. If you want to live with a large group of people, move back in with your family. If you want cheaper rent, move into a smaller and older place by yourself. And if you want to live around vibrant, interesting people who you can befriend and enjoy, stay as far from Hollywood as you possibly can.