After your final inspection and the Certificate of Occupancy is issued, your ADU is ready for move-in! This might be you, a friend, a family member, or a tenant. There are many benefits to sharing your property with a tenant, but renting also comes with many responsibilities – make sure you have a good sense of the laws governing rental agreements and think about the issues that might arise from welcoming a new neighbor into your space.
Prepare to Rent Your Unit
- Confirm the new street address for your ADU. You’ll need this street address to establish utility services and to set up your lease.
- Get the right insurance policies in place.
- Set up utilities.
- Develop a plan to handle the finances.
Understand Rental Laws
You will need to understand all the laws related to being a landlord, especially around discrimination. Landlords in Maine must comply with state tenant laws under the Maine Landlord-Tenant Act. A written lease is recommended, and fair housing laws must be followed.
Maine’s landmark housing legislation, LD 2003, was designed to expand housing opportunities across the state by making it easier to build and rent Accessory Dwelling Units (ADUs). Under this law, long-term rentals—such as monthly or yearly leases—are allowed for ADUs in most areas of Maine, and there is no state-level requirement that the property owner must live on-site. This means homeowners can rent out either the primary residence or the ADU. However, under the new law, municipalities may establish their own rules, which can include minimum rental periods (like 30 days or one year), permitting or registration requirements, or limits on the number of short term rentals in a neighborhood. These restrictions are especially common in coastal or tourism-heavy communities such as Kennebunkport or Boothbay. Since every town may apply its own ADU rental policies, it’s essential to check with your local Planning Department or Code Enforcement Office to determine whether short-term rentals are allowed, if there’s a required minimum rental period, or if owner-occupancy is mandated.
Set the Rent
Many homeowners are motivated to rent their ADU affordably to community members because they serve essential roles and often have difficulty finding housing that meets their needs. However, if you financed your construction with a loan, consider the loan length, interest rate and any reserve funds you have as well.
To help determine how much rent to charge, you can use online calculators, such those offered by Zillow and the Rentometer.
Write Your Lease
Make sure your lease (or rental agreement if it is month-to-month) clearly identifies all the expectations for you and your future tenant.
You will need a rental application to give to prospective tenants and a lease or rental agreement if it is month-to-month. Samples are available online. Once you select a tenant, you should collect a security deposit and first month’s rent when you sign the lease. Conducting a move-in inspection with your tenant is also a good idea.
Find Your Tenant
Research how to successfully advertise your ADU and select a good tenant. Along with word of mouth or posting your rental online, you can also contact nearby schools, faith communities, or other similar locations to see if any teachers, staff, or community members are looking for housing.
Typical methods for advertising rentals include sites like Craigslist and other online listings; neighborhood-based email list-servs; and posting a “for rent” sign on your property. Make sure to look up local rules about real estate signs, which may limit the size, quantity, and other characteristics of your signage.
Manage Your Rental Unit
Think through a long-term plan for the care and upkeep of your ADU, how shared responsibilities will be split, and how to address any issues that might occur with your tenant. Maine law requires landlords to maintain a habitable unit. Plan for regular upkeep and repairs.