The way you make money as a landlord is to have tenants. So naturally, you want to reduce vacancy time as much as possible.
But if you don’t leave enough time between tenants, you could have a really messy situation on your hands if the old tenant is still there when the new tenant plans to move in.
Many renters wouldn’t even want to get involved in a landlord-tenant situation that starts out so rocky. They might wish to terminate the lease. And you can’t really blame them.
Common Scenarios & What To Do
If you can leave a month between tenants to make sure they’re out and to give you plenty of time to ready the place for the new tenants, you’ve greatly reduced the problem of not having your rental ready for new tenants on move-in day.
But if you don’t want to lose a month’s rent, although the situation can be risky, you can take steps to help ensure your tenants won’t become unwanted holdover tenants when the lease is up.
These are all hypothetical situations. To be sure about your own case, you would need to check your state laws or check with a local attorney.
1. Holdover for a Day
Your current tenant finds out that they can’t move into their new place until the first of the month, so instead of leaving your place on the last day of the month like they’re supposed to, they ask whether they can stay an extra day and move out on the first.
Whether you let them because you’re afraid they’ll be homeless for that one night, or whether you don’t, and they stay anyway, you’ve got a problem on your hands when your new tenant expects to move in (per the lease) on the first of the month.
Asking the new tenant to wait one extra day to move in, until the second of the month, might not be the end of the world, depending on how well your new tenant takes this news.
To make the situation more palatable to the new tenant, offer to put this person up in a hotel for the night. You might need to also pay the movers if there are extra costs involved with rescheduling the move or with storing furniture.
2. Charging Your Old Tenant
Whether and what you can charge your old tenant for staying that extra day depends on your jurisdiction and its laws. Typically, if you allow your tenant to stay an extra day, the cost would be on you. But really, you should never agree to let your old tenant stay one extra day if you have a new person coming in. You don’t want to get off to a bad start with your new tenant.
If you did not allow your tenant to stay an extra day but they did anyway, you might be able to charge that tenant a month’s rent for staying one day over.
Typically, however, you can’t charge two people rent for the month for the same unit. This would be double dipping. You might, however, be able to charge rent for that one day plus any expenses you had to pay the new tenant. You would wait to see what the new tenant charges you, and then you would probably need to sue your old tenant, unless they willingly pay.
3. Tenant Won’t Leave and Stops Paying Rent
If you have a tenant on your hands who refuses to leave altogether, and you already have a signed lease with a new tenant, you’ve got a big problem on your hands. You now need to start the eviction process. If that happens, you can’t very well expect your new tenant to just accept this situation and wait. You took a risk, and in this case, you lost. Hopefully you’ll get back all the money you’re out in a court judgment against your deadbeat tenant.
4. Offer Another Unit
If you have another available unit, you can offer that to your new tenant, either as a temporary place for this person to stay until the place they actually rented is available, or as a permanent place for your new tenant to move into instead of the intended one. The new tenant would need to agree on one of those options for this to work.
5. Offer to Pay Expenses
Another option is to offer to pay expenses your tenant incurs as a result of you not having the place ready. Expenses could include a hotel and paying the new tenant’s moving company if they will charge extra for the delay. Your tenant doesn’t need to agree to this. And you might not want to offer this, depending on how far along in the eviction proceedings you are. You might want to just give back this person’s money (but check with a lawyer on this) and break the lease. You can then wait until you get the old tenant out, and then advertise your place for rent.
Back to Square One
If the potential new tenant gets out of the lease because you couldn’t deliver on the property, you now are back to square one, and you might be out money from inconveniencing this person. If that happens, you not only have no tenant moving in, you still need to pay for any expenses this person incurred while looking for another place.
Typically what happens is that your would-be tenant will pay extra costs and then will send you a bill. If you refuse to pay it, expect to be sued. Likewise, if you incur extra costs due to the old tenant refusing to move out, you can sue them for damages.
How to Minimize Tenant Overstays with Your Old Tenant
Make it clear before any tenant moves in what your expectations are for moving out. If, for example, your tenant will sign a one-year lease, make sure they know what happens when that year is up.
Ask yourself these questions:
- Does the lease automatically renew unless they let you know in advance they don’t wish to renew?
- If the lease doesn’t automatically renew, would they need to sign another one-year lease to stay, or will they simply become a month-to-month tenant?
- Does the lease terminate on the date specified on the lease?
- Do you plan to give notice to the tenant before the lease expires, even if the lease specifies a termination date?
- If the tenant stays as a month-to-month tenant and doesn’t sign a new lease, do they still follow the terms of the old lease?
All these issues are good ones to go over with your tenant before they move in so that there will be no surprises when the lease period ends.
You might wish to include a holdover provision in your lease that states what the penalties are if the tenant stays longer than they are supposed to.
Force the tenant to give 60 days notice
About two months before the lease is ready to expire, you should send your tenant a letter asking whether they want to renew the lease or if they plan on leaving. If they say they will not be renewing, it’s a good idea to send them another letter or an email that details what your move-out procedures are, such as having the place as clean as it was when they moved in and how to return the key to you.
Next Day Move-in: Risky but Possible
Although it’s risky to rent your place to a new tenant the day after your old tenant is scheduled to leave, it can be done. If you don’t like to gamble, you can always wait until your place is ready before advertising it for rent.
You might find someone who wants to move in right away, mid-month, instead of waiting until the first of the following month. In that case, you could prorate rent for that half month. That way, you’d lose only half a month in vacancy and can save yourself a huge potential hassle.