Most tenancies go as planned; when the lease period ends, the majority of tenants either choose to move out or sign on for another year. In some cases, though, you may have a tenant who chooses to remain in the rental beyond the official tenancy period—also known as a “holdover tenant.”
Understandably, having a holdover tenant can be a stressful and complicated situation. Read on to learn more about this unique situation and your options.
Please note this is for informational purposes only and isn’t intended as legal advice. Laws may vary based on your location.
What Should You Do if You Have a Holdover Tenant?
If you have a holdover tenant, it’s important to know that as long as you accept rent payments from them, the tenant can continue to live on your property legally. Although the laws vary from state to state, in many cases, the original lease will convert to a month-to-month tenancy.
If you don’t want the holdover tenant to stay, don’t accept any of their monthly rent payments. According to Investopedia, “If the landlord doesn’t accept further rent payments, the tenant is considered to be trespassing, and if they do not promptly move out, an eviction may be necessary.”
Prior to the end of the lease, your tenant should have decided to either sign a new rental agreement or end their tenancy. Most states mandate a minimum notice period from either the landlord or tenant regarding their decision. In cases where your state lacks specific notice regulations, it’s recommended to contact your tenant at least 90 days before the lease expires.
If the lease ends and the tenant hasn’t let you know what they want to do, it’s crucial to reach out to them and find out whether they intend to vacate the property on the agreed date or would like to renew the lease. If the tenant doesn’t respond or they’re undecided about their move-out date, the next step is to issue a notice of termination.
A notice of termination should typically include:
- The reason for termination
- The date that the tenant must vacate the property by
- The consequences if the tenant fails to comply by the specified date (usually legal action)
The specifics of this notice vary by state, so it’s recommended to seek legal advice before issuing the notice.
After you’ve delivered the termination notice, your local landlord-tenant laws will dictate when holdover proceedings can begin. A holdover proceeding is an eviction case unrelated to missed rent payments and is typically handled in eviction or small claims courts.
The notice itself might be enough to make the tenant take action. If not, it’s important to consult with a real estate attorney or contact the local eviction court for guidance on setting up a court date. Once the court date is set, the eviction proceedings can begin.
Rights of Holdover Tenants
Even though you may be anxious for the tenant to vacate the property, it’s essential to follow your state and local eviction laws. Holdover tenants still have legal rights, so self-help evictions are never the way to go.
However, you’re not required to accept a holdover tenant indefinitely, especially since they’re no longer bound by a lease agreement. If the tenant continues to stay at the property after the lease has ended, and you haven’t begun eviction proceedings, you have the option of starting a new lease with the tenant and asking them to pay rent for the extra time they stayed beyond the original lease agreement.
Avoiding Holdover Tenants
To prevent holdover situations, there are several steps you should take before and have the lease has been signed:
Before the Lease is Signed
- Clearly outline what happens after the original lease has expired. Long-term leases often transition to month-to-month agreements if a new long-term lease hasn’t been signed before the original lease ends.
- Clearly state the notice period for tenants to notify you of their intent to renew or terminate the lease; make sure this period complies with local laws.
- If local laws allow, include the consequences for failing to provide proper notice for the lease renewal or termination.
If your current lease doesn’t include these items, consider adding an addendum.
- Check in with your tenants 90, 60, and 30 days before their decision date to remind them of the deadline and your preferred method of communication.
- After you’ve received their decision, schedule a property inspection for the move-out process or send an updated lease if they’ve decided to renew.
- Communicate with tenants 90, 60, and 30 days before their decision date, reminding them of the deadline for their decision and the preferred mode of communication.
After the Lease is Signed
Another step you can take before the lease is signed and your property is occupied is to conduct a thorough tenant screening. Tenant screening can help you gain valuable insights into an applicant’s reliability, responsibility, and likelihood of fulfilling the terms of the lease.
An in-depth screening will help you select tenants who are more likely to adhere to lease agreements, provide proper notice before moving out, and maintain a positive landlord-tenant relationship—all of which significantly reduces the chances of having a holdover tenant.
Handling holdover tenants can be stressful, but by being proactive, you can potentially prevent them altogether!
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