Property Management Blog

How to Avoid Holdover Tenants

System - Monday, April 24, 2023
Property Management Blog

As a landlord, you have a lot on your plate, and dealing with a holdover tenant can be difficult. A tenant who is still occupying your rental property even after their lease agreement has expired is a frustrating and overwhelming situation, especially if you are not familiar with the legal procedures involved in evicting a tenant.

In this article, we will explore what a holdover tenant is, how to terminate a holdover tenancy, and, most importantly, how to avoid it altogether.

What Is a Holdover Tenant?

A holdover tenant is a tenant that continues living in a rental property without the landlord’s permission after their lease has expired. This can be for various reasons, including the tenant forgetting they need to renew their lease, needing additional days while moving out, or problems with their new place.  

In this case, if the landlord allows tenants to continue living on the premises, they must inform them that their lease has expired and a month-to-month tenancy has replaced it. This means the tenant can stay as long as they pay rent each month, but either party can terminate the agreement with appropriate notice.

How to Handle Holdover Tenants?

Handling holdover tenants requires lots of patience and understanding. 

a moving box and suitcases sitting on a bed

Depending on the situation, a landlord has two options, and both have their pros and cons. These two options are:

Evicting the Holdover Tenant

Evicting a holdover tenant may be the only option if the tenant has violated his obligations in the lease agreement or become a problem for other tenants. However, the landlord must follow all the legal guidelines while serving an eviction notice and initiating court proceedings against the tenant. 

This can take considerable time and effort and requires careful paperwork management and communication with the tenant.

Allowing the Holdover Tenant to Stay

Another option is to allow the tenant to stay on as a holdover tenant and negotiate a new month-to-month lease with them. If the landlord is comfortable with the tenant, this can be an attractive option as it allows him to avoid costly eviction proceedings.

However, such negotiations must also be done under local and state laws. Landlords must know their rights and responsibilities under relevant tenancy laws when dealing with holdover tenants. 

Even if the landlord allows the tenant to stay, they must also ensure that their rights are protected, and the tenant's behavior remains in line with the conditions of their new lease.

two people on a couch reading papers with boxes behind them

It is up to the landlord to decide whether to evict or allow a holdover tenant to stay in their property.

What Are the Drawbacks of Holdover Tenants?

There are many drawbacks associated with a holdover tenant. Some of them are:

Legal Challenges

Holdover tenants may pose legal challenges for landlords, as laws regarding eviction processes and landlord tenant disputes differ from those of regular tenants. As a result, landlords may face more difficult and time-consuming procedures to remove a holdover tenant who refuses to vacate the property.

Difficulty Controlling Vacancy

Holdover tenants can cause problems for landlords by extending the time to re-rent a property, leading to lost rental income.

Additionally, if the landlord finds a tenant who wants to rent the property on a longer term lease, then they have to evict the holdover tenant anyway. 

Maintenance and Property Damage

A holdover tenant may not take care of the property as they should, resulting in costly repairs. In addition, they may also intentionally damage the property to retaliate against their landlord. This can make it difficult for the landlord to properly maintain the property

Rent Restrictions

Some restrictions surrounding holdover tenants can prevent landlords from raising rent or pricing the home to rent for the duration of the tenant’s stay, and occasionally even longer. 

a couple talking to someone with a clipboard

This can reduce potential income for landlords.

How to Avoid Holdover Tenants?

Landlords can take several steps to avoid holdover tenants, including:

Clear Communication

Before the lease expires, landlords should communicate clearly with the tenant about the end date of the lease and the tenant's options for renewal or moving out. You can provide them with a move out letter

Lease Renewal Options

Offering lease renewal options or signing a new lease with the tenant before the current lease expires can help ensure that the tenant does not become a holdover tenant.

Early Termination Clause

Including an early termination clause in the lease can allow the landlord and the tenant to end the lease early without any disputes.

Timely Notices

Providing timely notices to tenants before the lease can help prevent a holdover tenancy. For example, landlords can notify the tenant a few months before the lease ends to remind them of the expiration date and their options.

How Does Periodic Tenancy Work?

When talking about a holdover tenant, Periodic tenancy refers to a rental agreement with no fixed end date. It continues until the tenant or the landlord gives the notice to terminate the tenancy. 

a person signing a contract

This implies that the tenancy will automatically renew unless the landlord or tenant provides adequate notice to vacate the property, usually based on the rent payment period.

The frequency of rent payments usually determines the tenancy period. For example, if a tenant pays a monthly rent, the periodic tenancy will be considered a month-to-month tenancy.

Wrap Up

Holdover tenants can be tricky for landlords to handle and can present legal, financial, and maintenance issues. 

Landlords should understand their rights under relevant local tenancy laws and take steps to prevent holdover tenancies by providing clear communication and offering lease renewal options. If a holdover tenant exists on the property, landlords should seek legal advice before proceeding.

Tucson Foothills Properties and Realty can provide valuable assistance in handling holdover tenants or helping you prevent them from occurring in the first place. Get in touch with us today to learn more!