There are times when a tenant stays at a property after the official tenancy has concluded. These tenants are known as holdout tenants. Removing them from the property can be a delicate and complicated process.
Keep reading to learn about holdout tenants and your options if you’re dealing with one that refuses to vacate after their contract runs out.
What Does Holdover Tenant Refer To?
Without the owner’s express permission to stay past their lease term, a tenant is considered a holdover. Normally, this tenant stays in the house, provided the owner doesn’t take any action. In the real estate industry, holdover tenants are a common problem, but due to modifications in legal requirements, addressing the issue can differ from state to state.
What’s more, tenants often have a legal right to stay in the rental until a landlord takes action to have them removed from the premises.
How Does the Issue of a Holdover Tenant Arise?
You could wind up with lingering tenants if a lease expires without your tenants signing a new one or indicating their desire to move. If the tenant continues to pay rent during that time, the tenancy will effectively turn into a month-to-month agreement. Most tenants, however, appreciate this since it enables them to live in the housing despite not entering a formal lease.
In the absence of an ongoing agreement outlining the tenancy’s terms, tenants could easily pose complications.
Problems Associated with a Holdover Tenant
If you wish to have the tenant removed from the property, you need to consult with a local attorney or property management firm that has extensive knowledge of the state’s rental laws. This is because the standard eviction process may not always apply to holdover tenants.
What’s more, because of the difficulties associated with removing such a tenant, you won’t have control over re-renting the property so filling vacancies and marketing could become challenging. In addition to this, planning for property maintenance or renovations could be a challenge with the holdover tenant residing in the rental.
What to Do About a Holdover Tenant
Having a holdover tenant can make it difficult to know what to do. It’s essential to be conscious of every choice available to you as the property owner and respond quickly to prevent unwittingly placing yourself in a more difficult situation. Consider these three options if a tenant doesn’t depart after a lease:
1. Let the Tenant Remain in the Rental
The first thing you may do is to let a tenant stay at the rental after their term has ended. Receiving their rent constitutes your agreement to their tenancy.
Because the implicit contract does not have a clear termination clause, this arrangement may be considered a periodic tenancy or month-to-month lease depending on the terms of your initial lease and local laws. If your previous lease lacked these clauses, it might be in your best interest to sign a new one rather than risk remaining in a precarious situation. Note that when doing this, you won’t be able to evict them on the basis of being a holdover tenant.
2. Remove the Holdover Tenant
If the tenant is still present, but you don’t want them to remain at the property, it’s time to think about a holdover tenant eviction. Under this type of eviction, this tenant is approached as a trespasser while the eviction process is completed.
However, as previously stated, it will be harder to carry out the eviction if you receive rent from tenants who dwell longer than you anticipate. In this case, issue a 30-day notice to vacate for nonpayment.
After that, you should carry out the eviction in conformity with the guidelines established by local and state authorities. If you are awarded a positive eviction ruling, the renters may be removed from your rented home.
3. Get the Lease Agreement Dissolved
Even if the lease or local laws allow for some stay, you should legally terminate the contract if the tenant is past the end of the lease term. In most states, you can accomplish this by providing notice equal to the interval between rent payments.
Following the receipt of the notice, the renter has a specific timeframe to leave the property. If they resist leaving after the tenancy has been properly canceled, you must petition for eviction to regain the property’s control.
Avoiding Holdover Tenants
You must provide your renter notice that the contract ends at least sixty days before the lease’s end date. Even better, when the expiration draws near, send them an additional notification to ensure they understand the terms of moving out.
If the tenant stays in the property after the completion of the lease period, don’t collect any rental income from them. Remember that after you receive rent, the tenancy changes to a month-to-month arrangement, and you cannot consider the tenant a trespasser making the removal process more complicated.
The most common issue for most landlords dealing with a holdover tenant is that they are unaware of what to do. You may successfully deal with this issue if you ensure that your actions are rational and in compliance with the correct state and location regulations for holdout renters. That said, it may in your best interest to partner with a property management company.
At Home Choice Property Management, we strive to maximize the financial potential of our client’s investment properties. With over 10 years of property management expertise, Home Choice Property Management offers a wealth of knowledge for property owners in the area. Contact us today to learn more about our services!