When a landlord offers a property for lease and an individual submits an application to rent the property, the application is either accepted or denied. When it’s accepted, the two parties enter into a lease agreement, which involves signing legally binding papers. This lease agreement dictates when a tenant is to move out and/or what requirements are in place for renewing or terminating a lease.
In 99 percent of situations, the tenant leaves in accordance with the lease agreement. But there are also situations where the tenant refuses to move out. In these situations, what’s a landlord to do?
What is a Holdover Tenant?
A holdover tenant is someone who has overstayed their welcome – legally speaking. It’s a tenant who refuses to move out after the end date of their lease. More specifically, it’s a tenant who stays in direct opposition to the landlord’s request to leave. (If a landlord doesn’t ask the tenant to leave, the tenant isn’t considered a holdover.)
What a Holdover Tenancy Is Not
“A common point of confusion is the distinction between holdover tenancy, tenancy at will, and periodic tenancy,” Mashvisor explains. “The confusion is not aided by the fact that a lot of people in the real estate industry use these concepts interchangeably. Nonetheless, the legal distinction between them is subtle and far from inconsequential.”
- Tenancy at will. This is where a tenant remains on the premises with the consent of the landlord. This is typically a verbal agreement and either party has the right to end it at any time. The terms of a tenancy at will are simple. And as long as both parties abide by basic landlord-tenant laws, everything is fine.
- Periodic tenancy. This is a tenancy where there’s no defined ending date. The lease just continues indefinitely until a formal agreement is reached by both the tenant and the landlord. Periodic tenancy typically occurs when either party neglects to provide enough notice of a change, or if the landlord keeps collecting rent after the lease officially ends.
A Landlord’s Two Options
Assuming you don’t have a tenancy at will or periodic tenancy, you have two basic options for dealing with a holdover tenant. You can:
- Allow the tenant to stay. You might decide that you’ll continue to accept rent payments from the tenant and allow them to stay in the property. This converts the relationship to a periodic tenancy and you’re no longer able to seek an eviction. (Assuming the tenant pays.)
- Start the eviction process. If you don’t want the tenant in the property any longer, you can start the eviction process (treating the holdover tenant as a trespasser). If you’re going this route, very specific steps must be followed. You’ll want to obtain the right legal counsel before pursuing this option.
Once you select one of these options, you have to see it through. Backtracking is not a legal option. Choose wisely.
Tips for Landlords to Effectively Handle Holdover Tenants
Convinced you have a holdover tenant? Here’s what you’ll have to do:
1. Have a Conversation
While you’ve certainly had conversations with the holdover tenant already, it’s time for one last discussion. Leave your emotions at the door and speak from a place of empathy. However, you need to be firm. Let the tenant know what’s about to happen and encourage them to take this opportunity to leave. If it hasn’t worked yet, your chances of convincing the tenant to leave now are slim. However, it’s worth a shot.
2. Offer Cash for Keys
During your conversation with your tenant, you might offer cash for keys. This is simply an offer where you give the tenant a sum of money in exchange for moving out and handing over the keys.
A cash for keys offer can feel like a gut punch, but you have to get over your pride. If it’s going to cost several thousand dollars to go through the eviction process (not to mention lost rent during that time), a $200 or $500 payment is nothing.
3. Send the Proper Notices
If the holdover tenant denies your cash for keys offer, it’s time to serve them the proper notices. This usually includes:
- A Notice to Cure, which is a formal notice to resolve the issue. After receiving this notice, your tenant has the option to make the payment and establish a new lease. But if there’s no response, the landlord is free to start the search for a new tenant.
- A Notice to Vacate, which demands the tenant vacate the property (legally speaking). This notice usually gives the tenant one month to leave the premises.
Once you serve these notices, you’re officially on the way to an eviction. Though a significant portion of the process still remains.
4. Take the Case to Court
If the tenant does nothing with the Notice to Vacate, you can begin the eviction process. This requires you to take the case to court and file to evict. The court notifies the tenant of the eviction during a trial and demands the tenant leave. The court can also require the tenant to make rent payments for the entire holdover period.
If the tenant still doesn’t leave, you’ll need to schedule an eviction. The sheriff will go with you to the property and remove the tenant, while you’ll be responsible for placing all of their belongings by the side of the road.
5. Don’t Violate Your Tenant’s Basic Rights
While the tenant is in the wrong, it’s important that you stay above reproach throughout the entire eviction process. Should you violate any of the following basic rights of the tenant, you could delay the eviction process or have it thrown out entirely.
- The right to live in a safe dwelling
- The right to file complaints about safety and health violations
- Proper notice before the landlord enters the premises
- The right to utility service.
As long as you respect these rights and follow the aforementioned steps, you should be able to end a holdover tenancy and move on with your life.
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