Tuesday, April 1, 2014

Keep your enemies close, and your friends closer


In my previous blog, "Blood is sticker than  water - Renting to friend or family", I outlined what can potentially happen when renting to a friend or family member if you don’t do a detailed background check like any other tenant. But, what should you look out for if you’re thinking of co-leasing a property with a friend? The title of this blog might seem harsh, however when it comes to entering into a lease with a friend, make sure you have all your bases covered.

The situation:

We had a case not long ago where two friends entered into a lease agreement without taking into account what might happen further down the line.
  • The female tenant had decided to take on a rental by herself. The landlord does the requisite credit check on her, she pays the deposit, and all is fine.
  • A few months later she decides to bring in a friend in as a roommate to help make the rental more affordable
  • She did the right thing by asking her landlord for permission
  • And had a new lease agreement drafted to include them both
The first mistake in this situation, and by the landlord, is that tenant number 2 is not credit checked and subsequently:
  • Tenant number 1 moves out into her boyfriends property
  • And asks her roommate to take over the lease, which tenant number 2 agrees to, not understanding the implications that by signing a lease jointly and severally, she is thus jointly responsible for the period that the lease was signed for.
  • She doesn’t inform the landlord that she is moving out
After a few months tenant number 2 starts defaulting on the rental payments. As it is near the end of the lease period she asks the landlord that he use the deposit as the last month’s payment, even though the deposit was actually paid by tenant number 1.
  • Tenant number 1 has left some of her belongings in the property before she moved in with her boyfriend
  • Tenant number 2 moves out but leaves tenant number 1s belongings in the property
Wrongful steps taken to fix the situation:

The landlord of the property is left in a tricky situation. He wants to rent the property out as soon as possible, but what should he do with tenant number 1s belongings?
  • He decides to move her belongings out himself and into storage, however
  • This is unlawful (spoliation)
Apart from being unlawful, moving someone’s belongings from your property without permission can cause landlords many problems and in this case
  • The tenant finally became aware of the situation (tenant number 2 moving out, and her moved belongings) and claimed that her R8000 mountain bike was now missing
  • Who took the bike? Tenant number 2, the landlord, was it stolen?
 
What could’ve prevented this problem?
 
  • The first step the landlord should’ve taken was to do a thorough background check on tenant number 2
    • Had he, he would’ve found out that she had a poor rental history
  •  When tenant number 2 moved out he should never have moved tenant number 1s belongings
    • This is unlawful and the tenant has every right to bring a case of spoliation against the landlord
  •  By becoming a member of TPN Credit Bureau he could easily and accurately profiled prospective tenants, even a friend of the current tenant in this case
What can other tenants lean from this?
The most important lesson to take away from this case study, for tenants, is that make sure you fully understand the responsibilities of jointly signing a lease. Even though you might be sharing a property with a friend, don’t be certain that when one or the other falls on hard times that the friendship won’t sour.
  • DO inform the landlord that you are moving out, and ask that a new lease be drawn up for tenant number 2
  • Follow the regulations upon moving out, landlord to check the property etc, so that you can get your deposit back
  • DON’T leave any belongings in the property when you move out

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