Some 36% percent of Americans rent their homes. Slightly more than half of these 44 million rental units are owned by independent property owners.
The typical small-time landlord owns just two or three properties, according to the Pew Research Center.
The legal complexities of renting one’s home can be onerous — for both parties. We’ll cover what happens when a tenant’s lease expires.
Process for Holdover Tenants
In most of America, a tenant may stay at least one month after their rental lease expires. Afterward, the renter becomes what is known as a “holdover tenant.”
Such holdover tenants are not necessarily a bad deal for property owners. But most landlords prefer the security of a legally defined lease period.
The arrangement becomes a month-to-month tenancy once the landlord accepts monthly rent following the lease expiration. Here, there is no formal agreement.
This type of rental arrangement may also be called “tenancy at will.”
And when a renter somehow pays rent against the owner’s wishes, that is known as “tenancy at sufferance.”
Sure, many landlords would accept rent payments in that situation. But for long-term planning purposes, the better option might be to refuse the rent payment.
Without the typical six- to 12-month lease, the owner loses some legal protections. Thus, the predictability for this income stream thereby becomes less certain.
Options for Landlords
The property owner may then consider a range of options.
They may wish to terminate the relationship entirely. Or they might wish to discuss options with the tenant.
Most states require the landlord to provide a 30-day notice for evictions. And wise, well-prepared landlords typically outline this possibility in the initial agreement.
However, the tenant’s financial situation may change with economy and job loss, or health reasons. The owner may also wish to sell or renovate the property.
For whatever reason, a renter may stop paying rent. Or they may fall months behind on payments. They might also balk at a proposed rent increase.
Regardless, property owners should provide written notice 30-days before the lease expiration. This prevents any confusion and establishes a legal paper trail for the courts.
The 30-day notice period applies specifically to agreements with monthly rent payments. However, those who pay by the year would require a year’s notice.
Options for Tenants
In some cases, the tenant may decide to vacate the property at that time. They may deep-clean the residence, too. They may ask for a reference. But not always!
Should the renter decide to stay, they may or may not still be paying rent. In either case, the property owner must carefully consider their options.
Kind words and gestures of appreciation often smooth the way to signing a new rental agreement. However, there is a range of behaviors not legally permissible.
When owners want holdovers to vacate, they may not legally harass them or threaten to use force. This, of course, includes threats and force by proxy.
Property owners are of course not allowed to remove a renter’s personal belongings from the property. They also may not change the locks.
That might seem obvious. But they are also not allowed to turn off utilities. In fact, the owner must maintain service even if they pay directly for that utility.
It is important to realize that landlords and tenants both hold rights in holdover tenancy situations. Both parties should know their federal and state rights.
Beyond that, common law holds that tenants deserve “quiet enjoyment” of their homes. The covenant forbids even the landlord from disrupting this right.
Generally, landlords have the right to sell or renovate their property. They also have the right to evict tenants who break the terms of the rental agreement.
However, the landlord only has the right to prematurely terminate a contract early when all parties agree. So therein lies much conflict when the owner wants out.
Property owners never have the right to ask a tenant to vacate for personal reasons. Someone’s likability does not factor into these decisions, no matter what.
Moreover, the Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, and disability.
These considerations may apply to holdover tenants whose status changes during the rental agreement.
A tenant may marry or welcome a new child into the family. They may get sick or otherwise become disabled, requiring new considerations.
The landlord also does not have the right to terminate the agreement in favor of a higher-bidding tenant. Simply put: a rental agreement is not like an auction.
A property owner’s rationale to ask a tenant to leave should always be based upon reason. Never should the landlord paint the situation in personal terms.
Further complicating things, housing codes in most U.S. jurisdictions afford the renter the right to withhold rent when owners fail to maintain properties.
Modern housing codes were established by states to ensure that renters avoid Dickensian conditions of squalor and disempowerment.
Most states require an implied warranty of habitability, which means the requirement to follow housing codes goes without even saying.
Thus, the property owner must generally comply with the state’s building and housing codes.
Most courts have declined to enforce any waivers of implied habitability placed in rental agreements. That means habitability is generally sacrosanct in housing law.
Generally, the tenant may withhold rent until the owner makes repairs. The tenant also has the option to withhold rent to pay directly for repairs.
In cases where the owner fails to meet standards, the courts even allow the tenant to sue for damages.
These considerations may complicate the situation between a property owner and holdover tenants.
What About Eviction?
Should the owner decide to force the holdover tenant out by eviction, they would have to reject any attempts to pay rent.
By accepting any rent — even past due — the landlord may forfeit the option to evict. The agreement would then automatically go month-to-month tenancy.
But with no rent-paying arrangement, the property owner could then move toward eviction.
Some property owners and tenants hold wildly inaccurate misconceptions about the eviction process, however.
Some small-time landlords believe they may evict the tenant from the property immediately. Some tenants believe the process requires a full six months.
However, the eviction process in most states generally takes as little as three weeks or in rarer cases as long as three months.
In all cases, the property owner must fulfill every legal requirement when suing for eviction. Otherwise, they may lose even more money in lost rent.
Even worse, missteps on the landlord’s part may provoke some unscrupulous tenants into damaging the property. Such hazards come with the territory.
Suing for eviction should be the last resort for property owners in any case. An eviction may cost between $3,500 and $10,000, according to Transunion.
To sue, the owner would file a lawsuit with the appropriate court and then serve paperwork to the tenant.
Some states require that paperwork be served directly to the tenant. Failing that, some states allow owners to post a notice to the property and to mail paperwork.
Afterward, the tenant holds the right to challenge the lawsuit on grounds of habitability or unfairness.
If siding with the owner, the judge issues an eviction order the landlord delivers to the county sheriff. The sheriff’s office then posts notice to the property.
However, the length of this process may vary considerably by state jurisdiction. In California, the sheriff may take 3 to 15 days to post notice. That notice is five days.
So the sheriff’s department may return to enforce that notice within 6 to 15 days. That means enforcement may come between two and four weeks after the order.
To avoid these eviction costs, a prudent landlord might wisely opt to give “cash for keys.” The property owner pays the unwanted tenant to leave — to cut losses.
Pandemic Complications Vary By State
Yet the time frame for overstaying a lease has been greatly complicated by state-to-state laws pertaining to the Covid-19 pandemic.
California state law now requires tenants to pay 25% of past-due rent between Sept. 1, 2020, and Sept. 30, 2021. That partial payment would prevent eviction.
The 25% payment may be settled in monthly increments or one payment, according to the city of San Francisco.
However, that forbearance does not mean forgiveness. The landlord may later take the tenant to small claims court to recover the entire balance.
And the landlord may sue for eviction for non-payment after March 31, 2022, if certain conditions are met.
The new state law applies only to tenants who prove they suffered pandemic-related hardships. It does not apply to other holdovers merely overstaying their leases.
The best advice for property owners and tenants alike is to negotiate in good faith. By dealing fairly and legally, unnecessary expenses may be avoided.
A month-to-month arrangement, therefore, maybe the best way forward.
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