Dealing with Roommates can be somewhat problematic if there is not a clear understanding of the issues and responsibilities involved in this arrangement. As a landlord, it is essential that you clearly understand the nature of a co-tenancy situation and explain it to each tenant prior to signing a lease. To further avoid co-tenant issues, it is an excellent idea to require that the co-tenants sign a Roommate Agreement (such as the one included in The Complete Landlord e-Guide) and deliver a copy to you.
Another issue involves dealing with security deposits. It is important to clarify a strict policy that the security deposit shall remain the collective property of all co-tenants regardless of how it was originally paid.
This means that when the tenancy ends, you have the right to make any refund check payable to all co-tenants (i.e. "John Doe, Jane Doe and Bob Smith"). This way, if there are any disputes over security deposit deductions for repairs, cleaning, etc., it will be the responsibility of the co-tenants to work out themselves and you can stay out of it.
This also means that if one roommate wants to move out, and another wants to move in, you as the Landlord (after approving any such changes and creating an addendum to the lease) should not be bothered with having to refund a portion of the deposit to the old roommate and collecting the same from the new one. Again, make it the tenants' responsibility to work out the details. Otherwise, you are better off terminating the lease entirely, completing a formal move-out inspection, deducting for repairs or damages and refunding the deposit balance, etc. so you can start all over with a new lease for the new tenancy. This way you eliminate the chances of damage and other financial disputes down the road.
As mentioned above, using a good Roommate Agreement will clarify these and other similar issues that often cause problems in multiple tenancy situations. It's an excellent policy to require roommates to review and sign one amongst themselves prior to signing the lease.
Check out the sample roommate agreements and legal tips at www.roommatesetc.com. Click on the "Catalog" link.
The following links from nolo.com also explain typical roommate issues: