Understanding a Holdover Tenant
What Is a Holdover Tenant?
Being a landlord can be stressful, and one of the stressful situations landlords sometimes encounter is holdover tenants. A holdover tenant is a tenant who continues to occupy a property after the lease expires, often without paying rent. A landlord in this situation is in a difficult position, because tenants’ rights laws limit possible courses of action. An eviction can be expensive and time-consuming, and it doesn’t even necessarily recover the rent lost while the holdover tenant is staying on the property.
Legal Implications of Being a Holdover Tenant
Sometimes, holdover tenants are just overstaying their welcome. However, in some cases, a holdover tenant is legally allowed to stay. If you’re a holdover tenant, and you continue to pay the rent, and the landlord continues to accept it, the law is on your side. By accepting the rent, the landlord is granting permission for you to live there, and, depending on the local law, either moving into a month-to-month rental or renewing your lease.
Holdover Tenant Definition: Types of Holdover Tenancy
Holdover tenants continue to occupy a property after their lease has expired, but there are different reasons they may do this, and different types of holdover tenancies.
- Tenancy at sufferance involves a tenant who occupies property without the permission of the landlord. This type of situation typically results in a formal eviction. However, if the landlord accepts payments from the holdover tenant, this can derail eviction efforts.
- Tenancy at will happens when the landlord allows the tenant to stay on the property. As long as the tenant pays the rent and abides by the lease terms, this informal agreement allows occupancy without a lease. This kind of holdover tenancy ends when either the property owner or the tenant decides to provide due notice and terminate the occupancy. Essentially, tenancy at will converts the lease to a month-to-month arrangement, and landlord-tenant laws remain in effect.
- Periodic tenancy offers more protection to the tenant than tenancy at will. This is a very loose type of lease, with no fixed term. It works out if landlord and tenant are on good terms, but can be tricky if the landlord wants to increase the rent.
Tips for Handling Holdover Tenants and Notice Requirements for Holdover Tenants
If you have a tenant that won’t vacate the property, you can choose negotiation and attempt to reach a new lease agreement. If this doesn’t appeal to you, or you can’t come to terms that are agreeable to both sides, you may need to initiate eviction proceedings, giving the tenant an eviction notice and going through legal channels to get your property back. Your best course of action, which typically prevents holdover tenancy, is to offer a lease renewal proactively, before the lease expires. If you don’t want to continue the rental, provide notice in writing, in advance of the date you want the tenant to leave. Generally, if you are terminating a lease agreement, you’ll need to give at least 30 days’ notice. Even if the lease will end automatically on a certain date, it’s in everyone’s best interest for the landlord to send a reminder notice to the tenant, in advance of the lease’s end date.
How to Prevent Holdover Tenants
The first step in preventing holdover tenants is creating clear lease agreements. Communication is the key to avoiding confusion, and a lease should directly state the duration of the lease and policies surrounding its renewal. Don’t stop communicating after the lease is signed, either, but keep communication open with your tenants. Send move-out letters to tenants well before their leases end, and give them lease renewal options that leave plenty of time for them to consider their options. When a property is vacated, and it’s time to rent it again, take care to conduct thorough screenings, so that you will have a higher probability of finding quality renters who will abide by lease terms. Does this all sound complicated? Consider hiring an experienced property manager. A property manager understands the local laws governing landlords and tenants, and can help you avoid legal issues. They can also communicate with your tenants for you, handling screening to find the right renters, then responding to issues and concerns. The right property manager will also handle property maintenance, keeping your properties attractive and well-maintained, to attract high-quality tenants.
How Tenants Should Handle a Holdover Situation
If you’re a renter, and you discover that you’re not going to be able to vacate the premises after your lease ends, communicate with your landlord immediately. You may be able to negotiate a new lease, or move to a month-to-month rental agreement. Be aware that property owners can choose to charge a higher rent for a holdover tenant. However, your only option, if you need to stay on the property, is to pay rent or be treated as a trespasser and evicted.
FAQs About Holdover Tenants and Holdover Tenant Laws
Holdover tenants are challenging for landlords, particularly if they don’t pay rent, causing the landlord to lose income. A tenant who overstays the lease can also make it challenging for the property owner to make any plans regarding the property, including maintenance, renovations, or looking for new tenants. Worse, some holdover tenants do not take care of the property, and this leaves the landlord with property damage to handle once the tenant is evicted. The two options are to accept rent, so that the lease becomes month-to-month, or begin eviction proceedings. If the landlord decides to accept rent, that rent may be raised, to discourage the holdover tenant from staying. This is referred to as a “DIY eviction,” and it’s something a landlord absolutely cannot do. If you are a property owner who wants to oust a holdover tenant from your property, you must go through legal channels, giving the tenant notice and filing for legal eviction.
Contact Westbay Management Company for Help Managing Your Properties
Holdover tenants are just one of the headaches that can make being a property owner overwhelming. Fortunately, Westbay Management Co can take all of the complications of ownership off of your plate, with our comprehensive property management services. Seasoned veterans in the industry, we’re one of the leading management companies in the Lansing and Jackson, MI area, and we’re passionate about helping property owners by handling things like marketing, financial management, and tenant relationships. When you partner with us, we’re ready and willing to help you manage your residential property in a way that is stress-free for you, yet attracts and retains reliable, trustworthy, long-term tenants. Contact us today to learn how our team can streamline your investment with our premier property management solutions.