It’s an unfortunate reality that separation often affects both your emotions and your finances, especially when the affected couple is bound by a lease. In these situations, landlords and tenants face many risks when the last thing on anyone’s mind is the paperwork that comes with moving on.
However, ignoring the admin that goes with the de-coupling process can lead to financial consequences that outlast the emotional fallout.
Here are the risks associated with the separation process, and some insights on how to manage these sensitive times accurately and with care.
Tenants, don’t leave your name on the lease
If you vacate the property, the lease must be updated immediately to release you from any legally binding agreement – until you do, you remain legally responsible to pay the rent. If your former partner stops paying, the obligation does not disappear simply because you no longer live there. In some cases, this can even affect your credit profile.
Updating the lease directly with the landlord or property company will protect you from being legally bound to any further obligations relating to the property and avoid potential conflict or uncomfortable confrontations with your ex.
Know who you owe
Changes on the landlord’s side can happen too, especially where ownership or relationship structures shift.
If the property changes ownership or banking details are updated, you need to be certain you’re paying the correct party. Paying the wrong account can create disputes that are difficult to unwind later. Clear, updated lease terms help maintain proper communication and ensure that payments are correctly directed.
Landlords, update your contracts
When a relationship between your tenants ends, a new agreement should be concluded before any party vacates the property, especially where the person leaving is the signatory to the lease. As a landlord, there is always a risk of being defrauded, which is why a thorough vetting process is essential.
Some individuals may try to avoid the consequences of poor credit records by not signing the lease themselves. To avoid this, ensure that all legal adults (18 years or older) residing in the property are formally contracted and signed onto the lease.
This is critical, as it allows legal action to be enforced against all parties in occupation, holding them equally accountable for the obligations in the lease, including eviction, if required. Failing to do so can leave the landlord without recourse against the remaining occupant, while still holding the departing tenant liable.
While it may be tempting to contract only with a primary tenant to avoid uncomfortable conversations, these situations often lead to far more complicated legal issues, especially in cases of separation.
In one instance, only one partner had signed the lease. After the breakup, the unsigned partner remained in occupation but could not keep up with payments. The landlord had no enforceable claim against this individual. Because the documentation was never updated, all arrears had to be recovered from the partner who signed the lease, despite having moved out.
Legal remedies are available, but they are often lengthy, costly, and draining, and can delay re-letting the property while rental income is lost. As unfair as it may seem, it is the legal documentation that ultimately carries weight.
Rental income follows ownership
If ownership of your investment property changes, it is important to understand that rental income and related obligations belong to the party (or parties) in whose name the property is registered. That said, ownership may be subject to trust deeds or settlement agreements, which can affect who is entitled to receive the income.
Property owners should ensure that the deed accurately reflects current arrangements and update it promptly where there are changes to trusts, beneficiaries, or income recipients. Unilaterally changing legal documents such as trust deeds can be considered fraudulent and may result in criminal consequences if rental income is received unlawfully.
Plan ahead
No one enters a relationship expecting it to end. But when it comes to property, planning ahead is not pessimistic; it is practical.
Taking the time to structure leases correctly, document ownership clearly, and keep agreements updated can prevent unnecessary financial strain later. It may not feel necessary in the moment, but it’s far easier to prepare upfront than to untangle the consequences after the fact.
WRITTEN BY SHANAAZ TRETHEWEY
Shanaaz Trethewey is a CA(SA) and Implementation Specialist
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither the writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes.