Dealing with Holdover Tenants

Transcript

Jonathan Forisha:

I’m Jonathan, this is Krista. We’re here to help you be a better landlord. Alright, today we’re going to talk about holdover tenants. First of all, what is a holdover tenant?

Krista Reuther:

Sure, there’s a lot of confusion around this term, but it is someone who is staying after the lease expires, and you don’t want that too. That’s really what it is boiled down. The lease has expired, they’re still there, you might be wondering what to do next.

Jonathan Forisha:

Yeah, so this is not something that a landlord wants. So I know a lot of people will have it in their lease that when the lease expires, say it’s an annual contract, when the lease expires then it goes month to month. But in that case, the tenant and the landlord would agree to it going month to month, and there might be a price increase, etc. Yeah. Holdover tenants, you don’t want them to stay, nobody’s agreeing to it, but they’re staying anyway. Exactly. So what is the difference between a squatter and a holdover tenant?

Krista Reuther:

So a squatter traditionally doesn’t have any tied to the property, they’re just looking for an abandoned space to come in and usurp over time. A holdover tenant had a legal contract with the landlord at some point, it’s just expired, they haven’t moved out. Gotcha.

Jonathan Forisha:

So if somebody has a holdover tenant and they are still willing to pay rent, should they accept that rent?

Krista Reuther:

Not if you want them to leave, because if they start paying rent and you accept it, they are no longer trespassing. If you don’t accept rent, then you have some legal options to push them out of the door, if you would like. Okay.

Jonathan Forisha:

What should a landlord do if they don’t want somebody to become a holdover tenant?

Krista Reuther:

Make sure that you have really good documentation in your lease that outlines what to expect from a non-renewal situation. It should let your tenant know how much notice they need to give you if they’re not renewing the lease and how much notice you need to give them if the reverse is true. So I would say first check your local laws because it’s going to dictate how much notice you’re required to give each other and then very clearly outline it for them in your original lease document along with any kind of consequences that they could incur if they do not follow your guidelines in terms of letting you know in a timely manner, following local laws and acknowledging receipt of a non-renewal notice if you send one over. Gotcha.

Jonathan Forisha:

And so how should the landlord approach that non-renewal notice?

Krista Reuther:

Sure. So you want to make sure that it includes all of the pertinent information such as when the original lease expired, when you need the tenant to move out, any kind of ending sequences that need to be done, whether that is a final move out inspection with you or scheduling it with your office, whatever that might be, and of course the consequences if they do not move out on the date that you have outlined.

Jonathan Forisha:

So at the end of the lease, most people put it in there that the lease could then become month to month. Should a tenant sign a new lease though, even in that case?

Krista Reuther:

I would say yes, might as well. You know, get everything documented to have a fresh signature if there are any other rules or stipulations you want to put in. That’s the time to do it, get everything on board, and then move forward with a smooth relationship with your tenant.

Jonathan Forisha:

Are there any other ways that landlords could help prevent holdover tenants?

Krista Reuther:

It is tricky because you won’t know at the start of a lease necessarily how the person’s going to behave at the end, but one good indicator of future behavior is past behavior. So I would say conduct a rigorous tenant screening process.

You can find ours at TurboTenant.com. It gets all of the background information about a person so that you can go through and see if this has been a situation that’s arisen before or otherwise nip any kind of bad behaviors in the bud by choosing the best fit for your rental.

Jonathan Forisha:

And as we do every time we talk about screening, it’s important to note that you should have the same process for every applicant. Yes. So if you’re going to say you can’t have any prior evictions, make sure you’re doing that across the board.

Krista Reuther:

Absolutely. And don’t forget to follow up with previous landlords to hear about their experience moving that tenant out. That can be really illuminating.

Jonathan Forisha:

Absolutely. All right, well thanks for chatting with me about holdover tenants. If you out there have any stories of your own holdover tenants, leave them in the comments below. Don’t forget to subscribe.