Aug 2, 2025
When tragedy strikes your neighborhood, you may feel a duty of care towards your fellow neighbors — especially if you’re close. But what happens when the ask exceeds what you’re comfortable offering?
John from Illinois found himself in a sticky situation recently. He and his wife own a lakehouse in a residential community. Their 70-year old next-door neighbors in this community live there year-round and recently lost everything to a house fire. Since John’s property is currently empty, they’ve asked John if they can temporarily move in.
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John wants to help his neighbors, but he also wants some advice and guardrails around navigating this tricky ask. How long should he offer his property for? Under what conditions? If they hope to stay for more than a couple of weeks, is asking for rent appropriate? What happens if another kind of accident happens to this older-aged couple while they’re on his property?
Here’s what you need to know if you find yourself in a similar situation.
What to consider before you hand over the keys
If you’re thinking of lending a property you own, whether to a close friend, or in John’s case, to acquaintances, there are several factors you need to weigh.
First, can you afford this act of generosity? Initially, it may seem that letting someone use your vacant property is without costs, but consider heating, lighting, water and other utilities. Depending on the length of time they hope to stay (and even the time of year and the property’s geographic location), these bills could be higher than you’re used to and will have to be worked into your budget. If you typically rent out this space, you’ll also want to consider lost earning potential for all the rentals you could have booked in this time period.
Also consider whether your vacation property is truly comfortable for a long stay. As John’s neighbors are in their 70s, for example, they may need special accommodations, like grip bars in the shower or a ramp for the porch. While his property is vacant, it may be more suitable for a young family with children rather than meeting the needs of a couple with potential mobility or health issues. Moreover, some summer homes are not adequately insulated against winter chills, so be sure you consider and communicate clearly your property’s shortcomings before you agree to lend it.
If you are planning to have longer-term guests in your vacation home, you should also consider a written agreement, even if they do not plan to pay for their stay. This outlines each party’s responsibilities while protecting you both should anything go wrong. Stepping up for your neighbor in their time of need is laudable in theory, but what does it look like in practice when they come to you with questions and requests, as other renters might, or if they inadvertently cause damage? Consider the time implications of being a host and landlord — even an informal one.
Responsibilities you may want to include:
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- Any house rules
- House guests
- Cleaning and any other maintenance of the property
- Any safety precautions
Be sure to have the document formally notarized to ensure all the terms you’ve agreed on together are enforceable. While you’re checking in on the legal side of things, have a look at your insurance policy to see if you will require any additional coverage for the duration of your neighbors’ stay. They may also need renters insurance. Planning in advance can save some major headaches down the road.
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Renting your home to friends and neighbors
If you are planning to rent to your neighbours for a longer stay, the first thing you should do is check your mortgage. Some mortgage agreements stipulate that a home must not be used as a rental property, so it’s important that you don’t inadvertently break the rules. (Incidentally, this might be a good reason to give your neighbors if you’re feeling wary of lending your home.)
You must also report this rental income on your tax return, so be sure you understand the rules and implications for your finances before you make a decision that may come back to bite you once tax season rolls around. For example, would this nudge you into a higher tax bracket?
If money is going to change hands, be sure you have lengthy discussions so that each side understands the terms of the agreement. A legal lease agreement document is a must, as well as written agreements and expectations for how they will treat the property.
Finally, a word of caution: In John’s case, he may be getting in over his head. His neighbor’s home insurance should have covered the cost of renting an apartment or other temporary accommodation while their claim was in process. If they didn’t have insurance, is it possible that they’re not responsible homeowners and not the best people to trust with one’s own property? If you’re in a similar situation and you’re having doubts, trusting your gut is always the best option.
John may consider instead generously donating his time to help his neighbors navigate their insurance claim, find help through charitable and community organizations, or find a new rental property. With so many of these transactions taking place online now and fewer seniors considered digitally literate, his help could be invaluable in allowing his neighbors to keep their independence without the load and complexity of overextending himself with people he has a social relationship with and who he may still share a neighborhood with in the future.
No matter what John decides, following the advice of his accountant and legal advisor can help him navigate this tricky situation while still offering support to his neighbors and ensuring their good relationship stays intact.
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Rebecca Holland is dedicated to creating clear, accessible advice for readers navigating the complexities of money management, investing and financial planning. Her work has been featured in respected publications including the Financial Post, The Globe & Mail, and the Edmonton Journal.
