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Ask a lawyer – Do I need to do a credit check on lease renewal?

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Q

Hi, I have three questions:

#1 For a lease renewal, do you draw up a new lease or just an addendum?

#2 Do you credit check the tenants again?

#3 What if the owner says we don’t need to recheck the tenants – what’s our risk?

A

#1 In the event of a lease renewal, an addendum would ordinarily suffice, as long as it accurately records any material changes to the terms of the initial lease agreement that the parties intend to apply to the renewed lease period (e.g. increased rental and any other additional obligations to be imposed).

#2 On the question of further credit checks, this too is unnecessary at the stage of renewal, especially since the landlord, when considering the renewal of a current tenant’s lease, would have the benefit of considering the tenant’s payment habits over the previous lease term.

#3 It is important to bear in mind that a lease agreement is not a credit agreement, and that the only value in performing credit assessments of potential tenants is to ensure that they pose minimal risk to the landlord. Obviously, when contracting with a tenant who has an established history of payment (with a particular landlord), it obviates the need for any additional credit checks, as the landlord would already be in a position to accurately assess the risk that a tenant poses and is able to make an informed decision on that basis.


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Who is Marlon Shevelew?

Marlon Shevelew, director of Marlon Shevelew and Associates.

Marlon Shevelew, director of Marlon Shevelew and Associates.

Marlon Shevelew is the director of Marlon Shevelew and Associates Inc. a law firm specialising in rental property, contractual, consumer and company law. The firm is the recipient of more than 45 international property law awards. Marlon is current author of PayProp’s rental documentation and preferred rental property attorney to the Institute of Estate Agents South Africa (IEASA), the Rental Housing Tribunal Western Cape and presenter of the Advanced Residential Property Law Seminar endorsed by the University of Cape Town. Marlon has featured on Cape Talk 567 and Property Matters on DStv, contributes as a guest expert to several property publications and was invited by Juta to write a book on rental property law, by LexisNexis Butterworths to edit its forms and precedents on rental property law and, on no less than three occasions, was invited by the Law Society of South Africa to lecture and train candidate attorneys and attorneys on rental property law. Marlon also created the unique Rental Retainer ClubRentDoc  and LevyDoc which offers clients affordable legal fees for rental property and sectional title related matters. Marlon is contactable on marlon@marlonshevelew.co.za anytime for more information on these services.

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