select
|

How to avoid rental defaults when tenants split

It’s quite common for landlords to rent apartments and houses to multiple tenants, but they need to make sure they’re covered in the event of one or more of these tenants moving out before the lease expires.
 
“We see this all the time,” says Greg Harris, CEO of Chas Everitt Property Rentals, “with students dropping out before the end of the academic year and moving out of their shared accommodation, for example, or young people who decide to go travelling or to relocate for work and leave their former flatmates or housemates behind.
 
“We have also encountered instances of properties being rented by engaged or even married couples who each pay half the rent until something happens and one partner decides to move out.
 
“And such situations can pose quite a problem for landlords unless their leases are correctly worded to state that the tenants in a multiple-tenant situation are ‘jointly and severally’ responsible for the full amount of the rent.”
 
This wording means, he says, that each tenant in a shared flat or house is legally responsible for making sure that the entire monthly rental is paid, so that if one moves out without warning – or perhaps does a “midnight run” because they are unable to pay their share of the rent – whoever is left will have to make up the difference for the duration of the lease or until the missing tenant is replaced.  
 
“To be fair, the lease in such cases should also provide that the landlord will make every effort to replace the missing tenant as soon as possible, and this is of course much easier if the property is already managed by a reputable letting agency such as Chas Everitt Property Rentals which can not only advertise for new tenants but conduct proper credit and employment checks before allowing them to take occupation.
 
“This protects the remaining tenants as much as the landlord, and on top of that we are experienced in dealing with departing tenants who wish to claim a share of the original damages deposit.”  
 
Harris says there is an alternative option for landlords, which is to make one tenant in a multiple-tenant situation the “primary” who is solely responsible for paying the total amount of the rent each month, but is allowed to sublet certain portions of the property – such as the rooms in a commune – and collect rent from the sub-tenants to subsidise his or her own payment.
 
“In some ways, this is more convenient for landlords as it means there is only one amount to collect each month and one tenant to evict, legally, if the rent is not paid. However, we do not generally advise it, as there are also considerable risks with such arrangements, including the fact that the landlord may not necessarily have control over who moves in or out, and that this can open the door to overcrowding and unacceptable tenant behaviour.”
 
In addition, he notes, it can prove difficult to physically evict sub-tenants even if you do get a court order to evict a primary tenant who is in default, and can develop into a really unpleasant situation if the sub-tenants have in fact been paying every month and the defaulter has absconded with their money rather than pay your rent.
 
“On the other hand, there are also risks for primary tenants in such instances of being left with the whole bill when sub-tenants leave suddenly or without paying, of not having professional help to find reliable replacements, and of being penalised for damages caused by the sub-tenants when the lease expires and they would like to claim their deposit back.”
 
Nevertheless, some landlords do prefer this set-up and once again, Harris says, the keys to avoiding problems are an experienced and diligent managing agent such as Chas Everitt Property Rentals, and a correctly worded lease, which in this case should provide that all sub-tenants must be vetted by the managing agent in the same way as the primary tenant, and can only move in subject to the landlord’s approval.
 
“It should also provide that the landlord or managing agent is to be advised immediately if one or more sub-tenants moves out, as an early warning of possible payment difficulties.”


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 23 Jan 2018
      Many people only start thinking about home-ownership when they are ready to “settle down” or start a family, which is why first-time buyers these days are generally in their mid-30s, compared to those in the previous generation who were usually in their mid-20s.
    • 22 Jan 2018
      Moving away from the city to a country or coastal town and a slower-paced life is a frequent new-year resolution for South Africans, but thorough research should be done before you break free from the hustle and bustle, because making the wrong move could turn out to be a very expensive mistake, and even more stressful for you and your family than staying in the “big smoke”.
    • 22 Jan 2018
      Cape Town is home to many breathtaking and historic homes, but House Invermark designed in 1969 by South African architect Gilbert Colyn, with inspiration from two modernist icons: the Glass House by Phillip Johnson and Farnsworth House by Ludwig Mies van der Rohe is in a class of its own.
    • 22 Jan 2018
      2017 was a challenging year for the South African property market in general, despite small pockets of thriving activity in areas like the Western Cape. As we head into 2018, Tony Clarke, Managing Director of the Rawson Property Group, casts his eye forward to property trends and market influences that could make their impact felt in the New Year.
    • 19 Jan 2018
      Extending from Randfontein in the west to Roodepoort in the east and including the towns of Krugersdorp and Magaliesburg, the West Rand has a plethora of property available to residents who choose to make this unique area their home.
    • 19 Jan 2018
      When it comes to financial planning, doing the work to ensure you’re prepared for unexpected emergencies is just as important as ticking off your other goals and New Year’s resolutions. The beginning of the year is also the perfect time to review your various insurance policies.
    • 19 Jan 2018
      No surprises at the first Monetary Policy Committee of 2018, as Reserve Bank Governor, Lesetja Kganyago, announced that the interest rates would stay at their current levels.
    • 18 Jan 2018
      The Southern Suburbs make up some of the most popular residential areas in Cape Town, comprising charming groups of suburbs which lie to the south-east of the slopes of Table Mountain. It is seen as the city's most expensive residential neighbourhoods with a choice of various private schools, upmarket eateries, wine estates, beautiful homes and trendy apartments.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK