When and How to Renew Leases

hand-101003_640-PDMost landlords do an annual lease to start, when it’s time to renew leases, they often have difficulty.  Most annual leases turn to a 30-day lease at their expiration.  The question is what thought process goes into the method of continuing the tenancy.

If you want to keep the tenant, but are unsure of for how long, let the lease revert to a 30-day notice lease.  The notice period is shortened to 30 days, at least for the tenant.  A landlord should still give ample notice, at least what is in the original lease, for a tenant to move out, so as not to have any discrepancies on a holdover eviction.

If the tenant requests a new, 12-month lease, get your most recent lease, with any updated terms and conditions, and resign the entire lease.  There is no substitute for having the entire recently signed lease in a Courtroom, if it comes to that.  An entire lease is much better than a simple form for a lease extension.  Sign a new Authorization for Release of information, Drug Free Crime Free addendum, Association Addendum, Pet Addendum and any other addendum’s that are required.  You can download these forms here.

If you want to lock up the tenant for another year and the tenant has not asked for a new lease, request that the tenant sign the entire new lease.  If the tenant refuses, you can evict, or go month-to-month.  A month-to-month situation after requesting a new 12-month lease is the same as saying “The tenant has beaten you”.  An eviction or non-renewal for a good tenant that would not sign a new lease says ‘You have beaten yourself”.  Even if you get a new 1-year lease, if the tenant skips, they may owe at most a month’s worth of rent – if you take them to Court.  No judge will allow much more than 2 months’ worth of rent, and one month should be covered by the damage deposit.

The option of just letting the lease turn to a month-to-month lease is a simple one.  No effort on your part, no effort on the tenant’s part.  They can break the lease with a 30-day notice, but so can you.  After the initial year, the tenant should trust you enough to know you would not do that, and you should trust them to give you ample notice for when they are ready to move.

When a tenant has an annual lease, they must decide if they are moving now.  If they do not move now, they are stuck for a year.  If things are slightly bad at the end of a lease term, they may decide to move out, rather than be stuck for another full year.  On a month-to-month lease, they may decide to stick it out for another month and see what happens.  The tenant might ‘stick it out for another month’ for years.  They can move anytime, so why move now?  No tenant likes to move, but they are at a decision point.  Move now or be trapped.  By remaining flexible, you could keep a tenant longer and save effort on your own part.

I have told tenants that if they request a new lease, I typically just keep everything the same.  I keep the same lease, same rent, and same terms.  That way they come to me asking for a new lease.  Often, I get the call for a new lease as we get close.

Remember, never rent to a sub-par tenant.  If you do, make sure they are always on a month-to-month lease.

If you are a renter, what kind of lease do you prefer? As a landlord, what is your lease strategy?

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