This post tackles tenant holding over: what to do when your tenant won’t leave.
Usually, landlords are always looking for ways to attract new tenants and retain the old ones. Yet, under specific circumstances, a property owner might want the opposite. Often, a landlord can afford to bide their time and wait for the lease to expire. However, you might encounter a renter who refuses to leave on rare occasions.
This situation presents a tricky property management issue, which we’ll address today.
What is Tenant Holding Over?
Before moving forward, we have to explain what a tenant holdover is. It is where a renter continues to live on a rental property after the expiration of their lease agreement. Sometimes, landlords and tenants can agree if the latter continues to pay rent. However, some occupants might refuse to leave despite the landlord’s protest.
One of the reasons a tenant might refuse to evacuate is if the owner is slow to renew their lease. Alternatively, they might decide to stay if they cannot find a different accommodation or have serious health issues. Dealing with such a scenario isn’t always straightforward, and you have to approach the situation based on your state’s laws. Given the circumstances, you might need to pursue a legal eviction through the courts or entertain other ways to get a tenant to move out without eviction.
Why is this Bad for Landlords?
There are many reasons having a tenant holding over can be a nuisance for a landlord. These include:
1. Costly Eviction Process
One of the most apparent reasons a holdover tenancy might be a problem for you is that evictions can be costly. If you choose to remove a renter from your property against their will, you must do it legally to avoid a wrongful eviction suit. Even if the tenant or occupant does not have a lease or permission to be there, landlords cannot simply remove them by force. Be sure to research local and state laws to discover what are squatters’ rights.
The eviction procedure involves many steps, including sending a notice, filing a complaint, and getting a court order. Besides the time and effort, you’ll have to undertake some legal fees. You might even need to pay movers to remove the tenants’ belongings from the house.
2. Halt in Cash Flow
Another problem with an unwanted tenant holding over situation is that it halts your cash flow. For instance, if the tenant refuses to pay rent, your unit isn’t generating positive revenue. At the same time, you might still be responsible for paying off the mortgage and footing some utilities. Consequently, this scenario can mess with your finances, making you lose money.
3. Inability to Perform Maintenance and Repairs
Rental properties require regular maintenance and repairs to remain habitable. When a tenant does not move out, you cannot perform such inspections and fixes with them on the property. As a result, some issues might deteriorate, costing you money in the long run.
Steps to Take if Tenant Does Not Vacate?
Having a holdover tenant is a precarious situation, which every landlord needs to handle with the utmost caution. Your reaction should be case-by-case to find the best solution. Here’s what you can do:
Negotiate New Lease Terms
As we highlighted earlier, one of the reasons behind a tenant holding over could be that the former lease has expired. Such scenarios are pretty common when there’s a transfer of property ownership. In that case, the new landlord has to create another rental agreement with updated names, signatures, and necessary adjustments. You can discuss these terms with the renter to find something amicable for both parties.
Start a Legal Eviction Process
If you cannot come to terms with the tenant, your next step might be to file an eviction. It might be on a payment or non-payment basis:
- Payment Basis: This scenario refers to proceedings where the property owner wants the tenant to leave the premises for money-related issues. The most common cause is failure to pay rent, but it can also extend to unpaid fees for damages. In either case, the landlord must send proper notice per local law to allow the tenant to pay, after which they can file for eviction.
- Non-Payment Basis: Contrary to the previous point, this scenario refers to when the landlord wants to evict for non-payment issues. That might include an expired agreement or violating the terms of the lease. If the renter fails to vacate the unit, you can proceed with a holdover action.
A holdover tenancy can be tricky, but you can navigate it seamlessly as long as you’re familiar with landlord-tenant laws. If you’re in such a position and unsure how to proceed, it might be in your best interest to seek external help. An expert property manager can steer you in the right direction and save you a lot of money.