It’s a nightmare scenario for any landlord. The lease expires, and your tenant doesn’t move out on time. You are then faced with the complicated decision of legally removing the tenant. After all, you cannot change the locks, cut off utilities, harass them, or do a self-help eviction. While the tenant won’t leave the rental unit, you are probably not getting monthly rent payments.

Unfortunately, the situation when a tenant stays on after the lease expires — called a holdover tenant — is all too common. What is worse — tenants’ rights mean you are limited in what you can do, despite being the legal property owner.

It may seem that your only option is to start legal proceedings. But, as any landlord knows, the eviction process can be expensive and time-consuming. And there is no guarantee that you can recover unpaid rent.

Are there better ways to remove a tenant who refuses to leave after the lease period expires? This article will help you know the answer to two vital questions:

• How long can a tenant stay after the lease expires?
• What should you do if a tenant doesn’t move out on time?

Understanding your legal position when a formal lease agreement expires is critical to answering these two questions.

What is a Holdover Tenant?

A holdover tenant is a renter who stays in a rental property after the lease expiration date. If they refuse to leave or do not have your express permission, they are a holdover tenant, and you can evict them. However, accepting rent payments means the holdover tenant can legally remain in the property.

How long can a tenant stay after the lease expires? The answer depends on whether you decide to accept rental payments from them. Accepting rent payments after the lease expiry date means you and the tenant enter an informal lease agreement. Sometimes, this arrangement can be advantageous for you and the tenant.

However, in most cases, holdover tenancies are rarely in a landlord’s best interests. They typically give more rights to tenants with fewer responsibilities. In cases where you continue to accept rent payments from a holdover tenant, state and local laws determine the lease terms. More often than not, you must give a 30 to 60-day notice for them to vacate the unit.

When a tenant stays on after a formal lease agreement ends, one of two types of holdover tenancies comes into force.

Tenancy at sufferance

A tenancy at sufferance means the tenant stays on after the lease expires without your permission. Also called a “holdover tenancy,” you typically must end this type of tenancy with a formal eviction. However, the tenant must still comply with the lease terms, and you must give the required notice to leave.

Should you accept monthly rent payments from a holdover tenant? It is best not to accept rent payments if a tenant refuses to leave the unit. Taking rent — unless it’s for unpaid rent under the original lease terms — can derail the entire eviction process.

Accepting rental payments after a tenant has outstayed their welcome can be viewed as entering a month-to-month lease.

Tenancy at will

A tenancy at will is when you do not renew the lease but allow the tenant to remain in the property. Usually, you or the tenant can end the informal agreement by providing proper notice. An “at-will” holdover tenant must continue to pay rent and adhere to the lease terms.

Local state laws define the “tenancy at will” lease terms. The fixed-term lease usually converts to a month-to-month lease if you continue accepting rent payments. However, it’s vital to remember that landlord-tenant laws still apply without a formal agreement. This includes adhering to the terms of at-will tenancies.

Therefore, you may still have to give the required notice to evict them for a lease violation.

Suppose the tenant stops paying rent or commits another lease violation. In that case, you can serve a notice to “cure or quit” to give the tenant time to resolve the issue. After the required notice period, you can start eviction proceedings and refuse to accept rental payments. However, the holdover tenancy remains in force if you continue to take payments.

Periodic tenancy agreement

Compared to an “at-will tenancy,” a periodic tenancy can offer greater protection to a tenant. This type of lease has no fixed term and remains in place until you and the tenant agree to terminate the agreement. A disadvantage of a periodic lease for landlords is that increasing rent is difficult.

In all cases, it is crucial to understand local landlord-tenant laws before taking action. Local laws dictate how to act if a tenant doesn’t move out in time and the appropriate notice requirements. These also depend on the type of “holdover” tenancy agreement in force.

Why Hasn’t the Tenant Moved Out?

It is incredibly frustrating when a tenant doesn’t move out in time. But to avoid these situations, it’s a good idea to find out why the tenant hasn’t left. Sometimes, the tenant doesn’t move because they need help finding a new place. Or they could be challenging an eviction notice.

Apart from the most delinquent tenant, it is usually possible to avoid situations where a tenant stays after the lease expires. Avoiding having holdover tenants in a rental unit can ensure you get regular rental income and avoid the cost and time of eviction hearings.

Here are a few reasons tenants don’t move out on time and what you can do about it.

Lack of clear communication with tenants

A common reason tenants don’t move out on time is a need for clarity in the rental agreement. The agreement should have a lease renewal clause stipulating what happens after a lease ends. Therefore, the rental agreement clarifies your expectations and what the tenant must do.

For example, the tenancy could become a month-to-month tenancy after the lease expiration date. Or you could state that the tenant must vacate the premises if they don’t renew the lease.

It’s also good to send advance notice that a lease renewal letter is approaching. This gives the tenant time to think about how they should act. And they have plenty of time to look for a new place if they plan on vacating the apartment.

Renew the lease early

You can often avoid holdover tenants by renewing leases early and giving them adequate notice. For example, although a 30 or 60-day notice is common, you could have a 90-day notice clause. This gives the tenant time to look for a new apartment during the current rental period.

However, always check with local and state rental laws about what constitutes proper notice.

The tenant ignores the lease expiry date

Some tenants chance their luck and hope to move to a monthly tenancy after the fixed-term lease ends. Even with months of notice, they may decide they love your unit so much they remain after the lease expires. But how long can they stay after the lease expiration date?

You have two options. First, you could let them become holdover tenants on a month-to-month lease. This may be possible if they are responsible tenants. However, your ultimate aim should be to renew a formal lease.

The second option is eviction. After the lease expires, you should send a notice to quit. Then file an eviction order at the local court and stop accepting rent payments.

The tenant disagrees with the eviction notice

The worst-case scenario is when a holdover tenant ignores the notice of eviction. They may have appealed the decision and refused to vacate the premises. In the first case, you must wait on the court ruling. However, if they don’t leave after a final decision, you can call the local sheriff and forcefully remove them.

How to Remove a Holdover Tenant

Removing a holdover tenant is a challenging process. But it must be done if they don’t move out on time after their lease has expired. Depending on the reasons for holding over after the lease expiry, you have several options, ranging from a friendly chat to a complete eviction.

Ask them to leave

Communication is always the first step when resolving issues with problematic tenants. Explain the lease terms, the notice you gave them, and any other relevant facts. Because staying after the lease expiry date is a violation, you can start eviction proceedings.

Most tenants realize an eviction is a black mark on their rental history, making it harder to find a new apartment. Additionally, seeking debt collection for unpaid rent could remain on their credit report for seven years and hit their credit score.

Depending on the tenant, you could ask them to leave within a few days. Or you could offer a tenancy at will for one month while they organize their affairs.

Cash for keys

You can offer a tenant “cash for keys” to leave if they don’t move out on time. This involves proposing to give them a cash sum if they turn over the keys on a specific date. The cash incentive could get the tenant out fast, avoiding a lengthy and costly eviction process.

How can you get a holdover tenant out with a “cash for keys” offer? Here are a few tips:

• Start with a lowball offer of around 10% of the monthly rent
• Arrange a date they will move their belongings out
• On the arranged date, inspect the property and ask them to resolve any property damage or cleanliness issues
• When you are satisfied everything is in order, get them to sign a document relinquishing their tenancy
• Hand over the cash
• Change the locks immediately

Remember, even with a cash-for-keys resolution, and you must still return the security deposit in line with state laws. For example, if necessary, you can deduct unpaid rent or the cost to repair property damage.

While this resolution is unfair to you, it can help resolve problems with bad tenants fast.

Evict the tenant

Eviction is the last resort when a tenant doesn’t leave the property on time. Unfortunately, evicting a delinquent tenant is the only legal way to remove them forcibly from the rental unit. In some states, you can file for eviction immediately without the specific notice to quit period.

However, it is crucial to refuse attempts by the tenant to make rental payments after the lease expiry date. This removes the tenant’s right to benefit from a tenancy at will or other holdover tenancies.

Unfortunately, the entire eviction process is long and drawn out. But if you have all paperwork in order, you can soon see the back of your bad-apple tenant.

Things you cannot do if a tenant doesn’t move out on time

When a tenant refuses to move out on time, you must ensure you are not guilty of illegal eviction. Here are some things to remember that you cannot do while waiting for a holdover tenant to leave the unit:

• Harass, threaten, or use force to get the tenant to leave
• Change the locks without their consent
• Refuse to make necessary repairs to keep the property inhabitable
• Arrange a self-help eviction
• Shuf off utilities
• Increase rent as a retaliatory measure for not renewing a lease in time
• Enter the property and remove their personal belongings

Know Your State’s Laws

Before taking action against a holdover tenant, you must determine the correct state laws that affect a tenant’s rights when a lease expires. For example, landlord-tenant laws can affect how much notice you must serve, what happens if you accept rent payments and the type of rental agreement.

After all, the last thing you want to happen is for an unwanted tenant to take you to court for a lease violation. Or you could inadvertently renew a lease, giving a tenant full rights to remain in the unit. You may have to wait until the lease ends before attempting to evict the tenant.

Cornell Law School advises landlords, “Given the variety of laws governing holdover tenants, tenants, and landlords should pay attention to the specific rules in their jurisdictions as they may unintentionally bind themselves to a new lease without ever signing one.”

Here are a few examples of what can happen if you let a tenant stay in the rental property after the lease expires:

• The tenant is treated as if they signed a lease with the same terms and amount of time.
• The holdover tenant becomes a tenant at will.
• Certain states require “just cause” to terminate a month-to-month agreement.
• Some states penalize tenants if they continue to pay rent after the lease expiration date.
• You must start eviction proceedings to remove the tenant from the property.

Therefore, always get legal advice before trying to evict a holdover tenant.

FAQs

Dealing with a tenant who stays after the lease expires can be tricky. Here are answers to common questions regarding holdover tenancies to help you know the best way to proceed.

What if they are paying rent?

Getting a tenant with an at-will tenancy out of your property may be necessary. However, as long as they pay rent, the lease is active. Therefore, you must determine state laws about evicting holdover tenants paying rent.

In some cases, you cannot evict without cause. In that case, you must wait until the informal lease expires, or they get behind on rent.

What if they aren’t paying rent?

Not paying rent is a lease violation and gives you a reason to file for an eviction hearing. If you want them out of the property, start eviction proceedings. First, however, you must give the delinquent tenant proper notice. Again, state laws regulate the appropriate notice you must serve.

What if their lease has expired?

Determining how to act with a holdover tenant depends on individual circumstances. For example, you could continue to accept rent and then get them to sign a new lease. However, if they refuse to go and won’t pay rent, then you must evict them.

Remember — consult with the rental agreement and state laws before evicting a tenant after the lease expires.

What if there is no lease agreement?

A tenant without a lease agreement is considered a “tenancy at will.” In this case, you can terminate the informal tenancy at any time. Unfortunately, this doesn’t mean removing the delinquent tenant from the rental unit will be easy. According to state laws, you may have to serve a 30-day notice. However, some states require a 7-day or even no notice.

Dealing with a tenant who doesn’t move out in time can be frustrating. But, in most cases, clear communication and a well-written rental agreement can stop holdover tenants from becoming an expensive and time-consuming issue to resolve.

However, whether the tenant pays rent, you must always follow state laws. Therefore, seek legal advice and follow proper procedures to avoid potential legal issues with a holdover tenant.

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CTTO Article Source: www.biggerpockets.com

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