Learn how to navigate post-lease scenarios with Keyrenter South Florida’s comprehensive guide on understanding holdover tenants.
Understanding Holdover Tenants: Keyrenter South Florida’s Guide to Navigating Post-Lease Scenarios
No matter how long you’ve been a landlord certain circumstances may still come as a surprise. For example, there are tenants who break the lease or leave early and there are also some that overstay their welcome. When landlords let the tenants stay even after the lease agreement has expired, the agreement will now fall under holdover tenancy.
While this is ok, this may cause various drawbacks for you and your rental business in general. That’s why we at Keyrenter Property Management South Florida have put together this article to give you awareness on holdover tenancy and help you protect your rental property investment.
What is a Holdover Tenant?
A holdover tenant is a renter who continues to pay rent even after the lease has ended. If the landlord agrees and they accept the tenant’s rental payments after the lease expires, the holdover tenant can continue to dwell in the property, legally. The lease then converts into a month-to-month contract until one party provides notice to terminate the tenancy.
A holdover tenant is also known as a tenant at sufferance which means that the tenant is only allowed to stay at the property because the landlord allows it.
Potential Issues
When tenants stay after the lease has ended, it can cause possible issues in the future.
These issues include, but are not limited to, the following:
- The regulations related to the eviction processes and the required steps in landlord-tenant disputes are usually different for holdover tenants. Make sure that you are up-to-date with your state and local laws, so you remain compliant.
- A holdover tenant may be challenging to remove them from the property. And when they finally leave, you may no longer have control over the vacancy and have a difficult time looking for a new tenant.
- Maintenance scheduled for when tenants moved out will be postponed if tenants refuse to leave after the lease has expired. The property may also be at risk for damages while they are still staying in your rental space.
- Restrictions related to holdover tenants may stop you from increasing the rental price as long as they are on the premises.
What to Do if You Have a Holdover Tenant
Landlords have several options when asking the tenant to leave the property but must always be mindful of the rules and regulations to remain legally compliant. Since tenants continue to stay after their lease is up, you have two options when handling a holdover tenant case:
- Allow the Tenant to Stay in the Rental Property – Continuing to collect monthly rent from the tenant means approving them to extend their lease and allowing them to stay in your property without any legal consequences. You won’t be able to evict them later based on the holdover agreement.
- Treat the Tenant as an Intruder and Initiate the Eviction Process – If you no longer wish to rent to the tenant, but they don’t move out following the end of their lease, you shouldn’t collect rent. This type of situation usually requires you to give tenants at least 30 days’ notice of eviction or longer depending on the rent payment period.
All of the conditions must follow state laws. To have a tenant removed from the property after the lease agreement has ended, the landlord must initiate a holdover procedure, which can act as an eviction case that is not due to missed rent payments.
Preventing Issues of Holdover Tenants
It’s strongly recommended that you avoid a holdover tenancy in general. You can remind your renter that their lease is expiring at least 60 days before their lease’s end date. It’s also good practice to send your tenants another reminder as they get closer to their lease end date, so they are aware of their move-out directives.
If for some reason the tenant ends up living in the property beyond the agreed end date, you must refuse any rental payments from them. Because if you do collect their rental payment, the lease becomes month-to-month unless a new lease is drafted and signed. Without an updated lease agreement, the holdover tenancy will take effect along with a number of limitations.
Understand Periodic Tenancies
Once holdover tenancy takes effect, periodic tenancy usually comes up. A periodic tenancy means the occupancy period will continuously roll over without having a fixed end date or tenancy term.
If neither party provides sufficient notice for leaving the property, then the agreement will continue depending on the established period. If the initial agreement was for the tenant to pay for the rent weekly, the periodic tenancy is considered week-to-week. But if it was initially established that tenants are expected to pay every month, then the periodic tenant is considered a month-to-month tenancy.
Bottom Line
When a tenant outstays their welcome, you must assess the situation and base your action plans on your business needs. If your property is better off without that tenant, you can refuse the rent payment once the lease is over and proceed with the eviction process. If you have a good relationship with your tenant and they have taken good care of your property, you may want to consider letting them continue the lease. From here, the tenancy can continue on a month-to-month basis, or you can renew the lease agreement altogether.
If you continue to accept rent after the lease ends, remember to provide your tenants notice that is equal to the rent payment period before initiating the eviction process. To avoid disagreements in the future, it’s strongly recommended that you partner with a property management firm.
If you need help with holdover tenancies or managing your rental properties, contact us at Keyrenter South Florida today!