When facing the end of a contract, there s always the question of whether to renew or end it. But you must always approach this sensitively. In this article, we ll look at how to handle a residential lease agreement as it comes to a close.
Notifying Your Tenants
Always make sure your tenants know what to expect at least 60-90 days in advance. If you don t want to renew the contract, they ll need time to find a new place. Should both parties renew, you must walk them through any changes to the agreement.
You should also touch base with your tenants and ask if they plan to stay there. The sooner you find out if someone s leaving, the quicker you can find a replacement. When even just one room is empty, every day will cost you money.
Always approach the topic sensitively, and don t try to force an answer out of your tenants. Make sure they know they can talk to you if they have any questions about the lease.
Changing the Rental Contract
Whether the tenants are the same or not, you might want to change your lease. You may decide to add more rules to reflect the realities of a tenancy. For example, a noise clause that suits your local noise ordinance. This will stop your future renters from disrupting their neighbors.
The actual rent prices will also be worth considering. Check nearby rental property values to see how your rates compare. Keeping them relatively low or average helps you stay competitive in a crowded rental market. Making them higher is sure to cause friction with your tenants.
When To End the Lease
If you re unsure about renewing, think carefully about the tenancy s ups and downs. Were there any serious issues or red flags? Can you trust them to pay rent, even if not always on time? It is important that you re sympathetic to your tenants; don t be afraid to offer second chances.
You might also simply want to do something different with the home. Are you considering selling your property? If it isn t profitable, or you just want to stop being a landlord, this is worth thinking about.
If you have a reason for not accepting a tenant beyond the lease, document it. For example, the renter might regularly leave the property in a state of disrepair. Take photos of this and use them if they question your reasoning.
If necessary, you can even evict the tenant before the lease is over. However, this can be a legal minefield. Make sure you know the laws surrounding US evictions.
Staying Flexible in Your Contract
Any number of details can change from one lease agreement to the next. This even includes the contract s actual length. For example, a month-to-month tenancy is on a rolling basis. This could be more convenient for tenants. They ll still need to give 30 days’ notice before leaving.
Not every tenant has to have the same terms. You can have one on a rolling basis and another on a fixed yearly contract. The latter gives you confirmation that at least one renter will be at the property long-term. Ultimately, being flexible will give you more options as well.
Always adapt a rental contract to your specific situation. While you ll be able to find new tenants easily, it s often better to keep your current ones. If they re sensible and follow the rules, offering them more flexibility could easily be worthwhile.
Are Electronic Signatures Binding?
E-signatures are quickly becoming more common. However, some people still doubt if they re a legal way of signing documents. Under the Uniform Electronic Transactions Act and other state laws, e-signatures are legally binding. You re free to use these for your contracts.
This method is picking up steam for a reason: it s convenient. You don t need to catch tenants in the home to initiate a signing. Property owners can simply email the document and give them a simple way of signing it electronically.
The Moving Out Process
If the lease ends without a renewal, carry out an inspection before a tenant moves out. This lets you see how much of the security deposit to return. If there s significant damage, make sure the amount you give back fits this. However, take note of your state s security deposit laws first.
Figure out an agreeable move-out date with your tenant. You may find someone to replace them before that time. You ll then be able to minimize your days without a paying renter. Make sure the old tenant returns their keys or leaves them in the property.
Conclusion
There s no guarantee that you and your tenants will be on the same page about lease renewals. Starting a simple, civil conversation about this can give every party piece of mind. In any case, it helps to use online lease templates that fit your state s laws.
