A holdover tenant is a tenant who continues to occupy the leased premises after the expiration of their tenancy agreement. When a lease expires, the tenant is expected to vacate the property on or before the lease expiration date.
If the landlord accepts the holdover tenant, they must inform the tenant that the lease is no longer in effect and a month-to-month tenancy has replaced it. This means the tenant may stay as long as they continue to pay rent, but either party can terminate the month-to-month agreement with the appropriate notice.
Dealing with a holdover tenant is a frustrating and complicated process. With the ever-changing laws, navigating your rights as a landlord and engaging with your tenant can feel like an uphill battle, especially if they are not adhering to their lease agreement.
This situation arises when, for whatever reason, a tenant fails to vacate the property upon the expiration of their lease agreement. Whether you’re hoping to create an effective strategy for dealing with holdover tenants or want to learn more about them, this post will share all the tips necessary for protecting yourself as a landlord.
Dealing with Holdover Tenants
The landlord has these two options when dealing with an unauthorized holdover tenant:
1. Evict a Holdover Tenant
If the landlord wishes to evict a holdover tenant, they must follow their local eviction laws. This typically involves serving them with an eviction notice and filing for an eviction in court. The landlord can only legally remove or lock out the tenant after obtaining an order of possession from the court.
2. Negotiate a New Lease Agreement
If the landlord does not wish to evict the tenant, they may have the option to negotiate a new lease agreement. In some cases, the landlord and tenant can come to an understanding that benefits both parties. The landlord can outline the terms of the new lease agreement in writing. Once both parties sign the agreement, it becomes legally binding.
When dealing with a holdover tenant, the landlord must understand their local laws and take appropriate action to protect their rights. If they choose not to follow these regulations, they can be held liable for any damages or losses that may occur. Also, landlords should take the necessary steps to ensure that their rental property is properly maintained to avoid any potential issues with holdover tenants.
What Are the Possible Issues with Holdover Tenants?
Landlords should be aware of all the potential issues that can arise when dealing with a holdover tenant. The several potential issues associated with holdover tenants include:
Unpaid Rent
When a tenant occupies the unit after the expiration of the lease, they may not pay their rent for that period. This makes it difficult for landlords to collect overdue payments and can leave them out of pocket.
Unlawful Detainment
In some instances, landlords may try to unlawfully detain a tenant after the expiration of their lease, which is illegal and can lead to legal action against the landlord.
Higher Vacancies
If a tenant remains on the property after their lease expires, it can prevent other tenants from moving in and thus lead to vacancies.
Damage to the Property
When tenants hold over without permission, they may not abide by any rules or regulations concerning the rented space, which can damage the premises.
Delayed Maintenance
A tenant who remains on the property after their lease expires may prevent necessary maintenance, resulting in safety and health risks.
How to Avoid Holdover Tenants?
The best practice is to try your hardest to avoid holdover tenants. We know this can be easier said than done, but there are a few measures that landlords can take to hopefully avoid this situation all together. Below we have listed some of our tips to help ensure you avoid a holdover tenant.
Provide Clear Lease Expiration Dates
By providing tenants with a written record of their lease expiration date, landlords can ensure that the tenant knows when they need to vacate the premises.
Send a Lease Renewal Notice in Advance
Landlords should send out a lease renewal notice at least one month before the lease expires to give the tenant sufficient time to decide whether or not they want to stay.
Communicate with Tenants About Move-Out Expectations
Landlords should clearly communicate any move-out expectations, such as cleaning the premises and returning keys, before the expiration of the lease to avoid any disputes when a tenant holds over after their lease expires.
Offer Incentives for Tenants to Vacate On Time
Landlords can offer discounts or free rent periods to encourage tenants to leave the premises by the expiration date.
Consider a Month-To-Month Lease Option
Landlords should consider offering a month-to-month lease after the expiration of an existing lease to give tenants more flexibility and avoid a holdover situation.
Screen Potential Tenants Thoroughly
Landlords should conduct background checks on all prospective tenants, including credit and criminal checks, to ensure that the tenant is trustworthy and will abide by all rules regarding the property.
Is Periodic Tenancy a Good Option?
A periodic tenancy is similar to a holdover tenant scenario, but with one key difference: The tenant remains on the premises after the expiration of their lease with the landlord’s consent.
This means both parties have agreed to continue renting the property despite the expiration date, and no new lease has been signed. In this case, the tenant must pay rent as per a new agreement, and the landlord is expected to maintain their obligations for upkeep and repair.
While a periodic tenancy may benefit landlords in certain situations, it is essential to remember that the tenant can still terminate the agreement without prior notice. If the landlord decides to increase rent or change the lease terms, they could find an unexpected vacancy.
Bottom Line
Holdover tenants can be a significant headache for landlords, leading to unpaid rent and delayed maintenance. However, by taking the necessary precautions and following the steps outlined above, landlords can minimize their risk of having a tenant holding over after the expiration of their lease.
It is also essential to consider all options when dealing with tenants nearing their lease’s end, such as offering a month-to-month tenancy or a periodic tenancy agreement.
To save yourself from the hassle of dealing with holdover tenant situations, contact Keyrenter Premier for the best property management services. Our experienced team will help you navigate all aspects of rental property management and ensure your rental assets are protected.