It’s an unfortunate reality that often separations break both the bank and your heart. In situations where relationships are ending both landlords and tenants are at risk. The last thing people wonder about is all the paperwork associated with moving on. However, the admin that goes with the de-coupling process if ignored can have dire financial consequences that stretch far further than the time needed to heal your heart.
Shanaaz Trethewey, CEO of RentMaster, shares the risks associated with the separation process and her top insights on how to navigate these sensitive times swiftly, empathetically and accurately.
Update your lease immediately
As a tenant, if you vacate the property the lease must be updated immediately to absolve you of any legally binding agreement you made to pay the rent. If you don’t update the contract to exclude you and your ex doesn’t pay rent, there is a chance that as the leaseholder you could be blacklisted. Updating the lease directly with the landlord or property company will protect you from being legally bound to pay rent or damages on a home you no longer occupy without directly contacting your ex.
Know who you owe
As a tenant, knowing who you are legally contracted to pay is equally important. If for instance there is a change in ownership of the property or a change in bank accounts when joint landlords changed their own relationship status you need to make sure you are paying the right person. Making this clear in the contract makes it easier for the channels of communication to remain open and a solid flow of where the money is routed to be established.
Sign up all your tenants
As a landlord, there is always the chance that you can be defrauded so it is extremely important that you put your tenants through a thorough vetting process. Some individuals may be trying to evade the consequences of their bad decisions in their records by not signing the lease themselves. To avoid any surprises, make sure that all legal adults (18 or older) living in your property are contracted and signed on your lease.
This is fundamental as it allows for legal action to be enforced on all parties living in the property and held equally accountable for the settlement of the obligation housed in the lease agreement. Including any eviction processes should that become required. While it may be tempting to contract with only a primary contact to ‘keep it simple’ the reality is neglecting to contract all parties leads to legal battles that are anything but simple, especially if the couple split up.
Shanaaz explains, “We have seen a case where there was a lease signed with one partner and post break up the unsigned partner was left in occupation, without the ability to keep up full payments. Unfortunately, the landlord did not have documentation that could be enforced against this individual as he was not on the lease at all”.
Of course, there are always legal remedies, but they mean lengthy, costly and draining months of legal back and forth where you cannot get another tenant into the property and earn the income you were counting on. Since neither of these parties updated the documentation, all arrears had to be recovered from the partner who signed the lease but had moved out.
“As unfair as the situation seems at the end of the day, the legal documentation is what is enforced,” says Shanaaz.
If you have changed the ownership of your investment property, as a landlord you need to understand that the rental revenue and obligations belong to the party or parties to whom the property is registered. But be aware that registration could be subject to trust deeds, or settlement agreements.
Property owners also need to be clear on what is listed on the deed and update it immediately should there be changes to trusts, beneficiaries or any recipients of the returns associated with the property. Changing legal documents such as trust deeds unilaterally can be considered fraudulent and can result in criminal charges for landlords who receive rental that is not legally theirs.
Going through these levels of scrutiny to ensure that you are not open to these risks as tenants or landlords may seem unnecessary in the midst of a dream marriage or relationship but these risks are all too real. Sad it may be, planning for the worst and trusting that the best happens is a far greater strategy for long term happiness than being duped or dumped.