Most of the time, landlords fear that a tenant will leave before the lease is over, but sometimes, tenants decide to stay in the rental even after the lease term has ended.
Technically, the tenant can stay for as long as you let them. This is called a “holdover” tenancy, which may cause a variety of disadvantages for you and your rental business.
What is a Holdover Tenant?
A holdover tenant is a tenant who stays in the rental unit after the lease expires. If the tenant continues to pay rent, the tenancy essentially becomes a month-to-month tenancy. A holdover tenant is legally allowed to stay in the rental unit as long as the landlord takes no action to remove them. A holdover tenant is sometimes referred to as a “tenant at sufferance,” meaning the tenant is only on the property because the landlord is tolerating it.
A tenant staying in the rental unit after the lease has expired can create a number of issues, like:
- Laws governing eviction processes, and other actions taken for landlord-tenant disputes, are often different for holdover tenants. Always check your state laws to ensure you are compliant with your local jurisdiction.
- Since it may be more difficult to get rid of a holdover tenant, you won’t have control over when there is a vacancy. Your tenant could move out when it is difficult for you to find another one and sign a new lease.
- Scheduled maintenance that is usually performed after a tenant moves out may need to be postponed. You also have the risk of your tenant causing more damage while they are still residing in the rental.
- Restrictions regarding holdover tenants may prevent you from raising the rent for as long as the tenant stays — and sometimes, even longer.
What to Do
There are a couple of ways that you can handle a holdover tenant situation:
- Let the tenant stay. If you continue to collect monthly rent from the tenant and allow them to stay in the unit, you won’t be able to evict them later based on holdover.
- Treat the tenant as a trespasser and evict them. You can usually evict a tenant for non-payment of rent, or criminal behavior like drugs or domestic violence. Usually, the holdover tenancy is treated as a month-to-month tenancy, so you would have to give your tenant a 30-day (or however long the rent payment period is) notice of eviction.
In most states, laws state that landlords are bound to the option they choose. There are also ways to get rid of a tenant without evicting them, but make sure they don’t violate any holdover laws in your area. You should consult an experienced attorney to verify that your actions are legally compliant.
Avoiding Holdover Tenants
It’s best if you are able to avoid a holdover tenancy altogether; this way, you won’t have to alter any of your rental business proceedings. You should remind your tenant that their lease is ending at least 60 days before the last day of the term. It may even be a good idea to send another reminder closer to the date to ensure that they are aware of their requirements for move-out.
If the tenant somehow ends up staying past the lease term, don’t accept any rent payments from them. Once you start collecting rent, the tenancy becomes a month-to-month tenancy, and you won’t be able to treat them as a trespasser and evict them. Unless a new lease is signed, you should not accept any rent from the existing tenant, as it will incur a variety of restrictions.
What is a Periodic Tenancy?
When speaking in terms of a holdover tenancy, a periodic tenancy will sometimes come up. A periodic tenancy is one with no fixed lease term or end-date. This means the tenancy just keeps rolling over. If neither the tenant nor the landlord gives adequate notice for vacating the property, then the tenancy will continue, depending on what the “period” is. A period would generally constitute as the rent payment period. For instance, if a tenant pays every week, the periodic tenancy would be considered week-to-week.
A Final Word
When a tenant stays past the lease term, it’s important to evaluate your unique situation to make the decision that is most beneficial to you and your business. If you dislike the tenant, it’s probably better that you don’t accept rent after the lease expires and go on with the eviction process. On the other hand, if you have a good relationship with your tenant, you may want to consider letting them stay. You can continue the tenancy on a month-to-month basis or choose to renew the lease agreement with them.
Remember, if you continue to accept rent from the tenant after the lease is over, then you must give them a notice equal to the rent payment period before evicting them. Add a clause to your lease that has specific terms outlining holdover tenancies, if you don’t already, to prevent any misunderstandings in the future.