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Tenant has 5 extra people in apartment.

I inherited the tenant with the property and there is no lease. I recently found out that instead of 2 adults living there I have 4 adults and 2 kids in an 800 square foot apartment. I'm new to this and wondered if this is legal ? Should I raise her security deposit or do nothing?? Would this void my insurance ??? She has been a good tenant and keeps the place in good shape. Should I rock the boat and play hardball? Thanks for any advice:)

Sorry, I meant 3 kids.
First and foremost, I would get them on a good written Lease. You leave yourself very vulnerable without one. Check with the occupancy limits in your jurisdiction. There may be limitations and you can blame it on that. that may work better than getting all official. Are utilities included in this rental? What is the biggest deteriment to having the extra people? Weigh it out. If she isnt destroying the place and paying her rent on time,, it may be better to let it go. however if you are suffering with higher utility bills, damage to the property or nuisance calls, then I would consider putting an end to it.
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