Tip #52

Require Your Tenants to Give 60 Days Notice of Non-renewal

Written on June 11, 2015 by

Non-renewalLease renewal is a touchy subject, and in my opinion, it should never be guaranteed.

Some landlords prefer an automatic renewal approach, and even sometimes, the tenant is given a “guaranteed” renewal option. No thank you.

I never know what the future holds, and I need to keep my options open. I prefer not to be tied down like that.

None of my leases have automatic renewals, but I do require my tenants to give 60 days notice of non-renewal. Basically, I’m saying:

“If you plan on leaving when your lease is up, you have give me 60 days notice.”

It’s a great tactic that has reduced my vacancy to near zero, and saved me lots of time and money over the years.

Don’t Give a Guaranteed Renewal

guaranteed-renewals

If I get a bad tenant, the worst possible outcome is for them to have the “right” to renew at the same price. Meaning, they can renew, under the same terms, even if I don’t want them too.

Some inexperienced landlords have this clause in their lease, but I think it’s a horrible mistake. When signing a fixed-term lease, I never guarantee an option to renew.

Why in the world would I tie my hands like that?

When reviewing the lease with my applicants, about half of them ask “Will I be able to renew?”.

I always answer the same way:

“If you’re a good tenant, and I don’t have any other plans for the house, then of course I’ll give you a renewal offer. But we’ll need to work it out when the time comes. If you want to guarantee your tenancy for a longer term, we’ll need to sign a longer lease.”

To the best of my knowledge (although I’m not a lawyer), no state requires a landlord to renew a fixed-term lease. It would defeat the point of having a fixed end date. Although some tenant-friendly cities, like Washington D.C., give the tenant the right to go month-to-month after a fixed-term lease, with the same terms.

Further, many rent-controlled cities in California, say that a landlord can only terminate a tenancy for a variety of reasons, and no-cause terminations are easy fought.

What About Automatic Renewals?

An automatic lease renewal is ideal for at-will tenancies, such as week-to-week, month-to-month, or year-to-year. However, I don’t think it’s appropriate for a fixed-term lease (a lease with a set end date).

With that said, just because a lease automatically renews, doesn’t mean either party can’t terminate it with proper notice.

Automatic renewals have some negative consequences on a fixed-term lease:

  • The manager won’t visit the property as often
  • The landlord will forget about the renewal and miss an opportunity to raise the rent
  • Many tenants forget about the date too, and then want to abandon their lease at a later time

60 Day Notice of Non-Renewal

None of my fixed-term leases automatically renew, however I still require a tenant to give me 60 days notice, prior to the lease end date, of their intent to move out.

Meaning, the assumption is that they will be renewing (assuming the rent doesn’t go up too much), even though the lease doesn’t automatically renew.

It just means that we need to sign a new lease if they want to stay.

My Lease Clause

The Main Benefit

The reason for this requirement is that it guarantees I have 60 days to try to find a new tenant. If the tenant fails to provide 60 days notice of non-renewal, they will still be held responsible for 60 days of rent, unless I can find a replacement sooner.

For example, if the lease is scheduled to end on June 30, then they must give me notice by April 30th of their intent to vacate when the lease ends. If they don’t give me notice until May 15th, then I can hold them responsible for rent through July 14th (60 days), if I don’t find a replacement tenant prior to that.

Always Send a Reminder

Because this 60-day requirement is unusual, I try to remind my tenants of their 60 day responsibility at 70-75 days from the end of the lease – so that they can start thinking about their options.

If I plan to offer them a renewal agreement, I will send the new terms to them with this reminder. After all, how can they be expected to make a decision if they don’t know what the rent price will be?

This is my renewal reminder email:

In summary, be fair, be logical, and give them a renewal offer before the 60 day deadline. If you refuse to offer a renewal, then tell them so. Let them know that they must move-out when the lease is up. The more time they have to plan, the less risk there is of an unlawful detainer.

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118 CommentsLeave a Comment

  • Cristy

    I find 60 days to be unreasonable for the same reasons many others have posted. 60 days requires that the tenant must secure another dwelling at least 2 months in advance. It is nearly impossible to find another place/landlord who will wait 60+ days for you to move in. Most listings are available immediately or within 1 month. 30 days is plenty because the owner should take at least 1 week to clean the home anyway regardless of notice. That provides at least 37 days. Sorry, but this should be an understood and expected loss/risk when leasing your property. You may have to cover a month or so on your own as the landlord when a tenant vacates. The 60 day notice is essentially a trap for your tenant unless they are purchasing a home.

  • Dan Hunter

    Hi Vanessa, You need to go back to the lawyer that negotiated the original extension of lease and let him negotiate another extension. Don’t forget to pay him for the first extension or he might refuse your business for negotiating second extension.

  • James J

    Isn’t this illegal in California? Here I heard that tenants have to give a 30 day notice (on a month to month) and even a signed agreement for longer, makes it invalid. Please let me know. This has been coming up lately as a tenant of mine gave me a 30 day when we agreed for a 60 day and now he is telling me that he is in his rights.

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