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When Tenants Overstay Their Lease

Tenants move.  It’s just a fact of a landlord’s life.  As much as we might like them to stay (well most of them), they rarely do. 

When they move, vacancies become a major concern.  The cashflow stops but the bills remain.  So, getting the unit re-rented as quickly as possible becomes a priority. 

The best case scenario is to have a tenant move out one day and another move in immediately the next day.  Think about how great that is.  It is almost perfect as there will be little if any interrupted cash flow.  We have had the good fortune to have this happen a few times over the years. 

But wait a minute.  No matter how well you might think you have things lined up, Murphy and his darned law is always right around the corner.  Things can go wrong and can go wrong pretty quickly.  The movers might be a day late to move your tenant out.  A new job may be eliminated meaning the tenant no longer wants to move.   A car can break down and a whole host of other things can go wrong.  Other times the tenant just does not get it together and actually move out. 

What happens then?  What happens if you have scheduled someone to move in the next day?  Things can get sticky real quick.

Imagine for a moment that you are your new tenant.  You are moving from out of state and have all of your belongings in a truck, a truck that has to be returned the next day.  You have scheduled movers, utility connections, satellite TV installation.  Are you supposed to rearrange all of this?  Are you supposed to sleep in the truck?  What about all of the added expenses, not to mention the aggravation. 

Your new tenant is going to be looking right at you for answers.  After all, you are the one breaking a contract by not having a place for them to live.  They will want to be reimbursed and accommodated for their hassle.  They will have a strong case and they know it. 

Here is what to do.

First, try to leave a day or so wiggle room from move out to move in.  A loss of one day’s cash flow is not that bad and it may just give you the time you need for when Murphy shows up and starts making things go wrong.

Secondly, place a clause in your lease that charges the tenant $100 per day for any time they (or their stuff) stays in the property past their move out date.  In this way you are somewhat protected if you incur expenses due to someone not moving when they said they would.  Plus it really provides incentive for them to get out when they said they would.

The key is to be very clear about this provision when they move in.  Let them know you will charge it.  Get that motivation started the first day they move in.

Finally, apply the pressure to your old tenant.  Let them know they cannot stay and keep on them.  You may have to literally push them out the door. 

Honestly, this scenario is hardly ever a problem, but it can and has come up.  So be a smarter landlord and be prepared for it.

Comments
8 Responses to “When Tenants Overstay Their Lease”
  1. It is always the greatest fear, having two people in the same apartment. But better tenants seldom stay past their date. I have a 10 AM move out time on the last day of the lease. Most of my turns are one day.

    Never sign a lease with the new tenant, unless you can deliver the apartment. Or you might get stuck with a hotel bill. Just get a holding fee and leave it at that until the day the apartment is ready for move in.

  2. When working with buyers as their mortgage lender, I have seen several occasions where the sellers renter would not leave the property and prevented the buyer from closing and moving in. The seller could not get the renter to move of of the home!

    One of the transactions, the delay caused the buyer rate lock to expire and the had to pay to extend it, plus the renter, who had to be evicted, trashed the house.

    Not a common scenario, but it goes to show you what can go wrong in the sale of a home.

    • Kevin says:

      Brad,

      I have seen that as well.

      If the renter has a valid lease however, he cannot be removed just because the property is sold.

      Sellers have to make sure they put a clause in the lease that will void it if the property is sold. And then make sure the tenant initials by that clause.

      Even so, may take a judge and several months to get an uncooperative tenant out.

      Thanks for the heads up and for reading and commenting,

      Kevin

  3. Janne Zack says:

    Thanks, Kevin, GREAT ideas! We had a tenant die and it took almost 5 months for the family to get their things out of our space (commercial office space). Wish we had this in his lease… we are trying to petition the probate to get the rent, who knows what will happen.

  4. John Bergstrom says:

    “You may have to literally push them out the door.”

    Uh, completely illegal in all states…

    If a tenant overstays his/her lease, you have to serve the tenant(s) with a ‘holdover tenant’ notice, go to court and get a court order to evict the tenant.

    Any attempt to do a ‘self-help’ eviction without a court order can result in civil and criminal liability, and likely cost you a bundle..

    • Kevin says:

      John,

      True, if they are not in the process of leaving. I has been my experience in these cases that the tenant is trying to leave, they are just running behind schedule. Thus, helping to push them out the door to me means just getting them back on schedule.

      But you are correct. If they do not leave you will have to go to court and evict. Thanks for the clarification. Perhaps I could have worded that better.

      Kevin

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