You'll always hear stories - but that's the key word. "Stories". They rarely mirror reality.
This is unfortunately a lesson many family members have to learn very quickly; you don't necessarily need an agreement be it verbal or written in order for your family member to be considered a tenant. It might sound wacky, but it's the truth.
I make it a rule to never do business with family or close friends. Not because I don't trust 'em, but because all too soon a business decision becomes very very personal and the relationship fractures, sometimes irreversibly.

