long term tenant won't sign new lease

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long term tenant won't sign new lease

Leo M.
Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes

I have a tenant who has been in a house for almost 2 years.  She has always paid the rent on time and for the most part has been good with the exception perhaps of not being quite as tidy as I'd like but mostly good.

For some reason she will not sign the new lease which has no rental increase and essentially the same terms.  I have written notes, left voice mails, text but no reply.  I had spoken to her about this several weeks prior to the giving her the new lease and she seemed fine with renewing.

I am in PA so we are now on a month to month lease by state law which is not the worst scenario.  However, I do not like the tenant "making the rules or running my business".  On the filp side she has never been late and I am still collecting.  Of course I let this slide and then it could start a trend.

Should I send a her a notice to sign or move ( I have all my tenants sign a waiver of right to quit, therefore no notice needed to evict ).  Or keep collecting since she pays every month and is otherwise hassle free. 

Thanks, it's a bit of a dilemma in that a paying tenant who causes no problems is generally a good tenant and I'd like to keep them but I also like my rules/systems.

LBM real estate investor

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Michael Nemeth
Residential Real Estate Broker · Washington, DC · Member since 2014 · 27 posts · 16 votes
12y

I don't understand the need for cornering a good tenant and forcing her hand.  What is "won" by doing that?  To turn a good tenant into a longer-term, uncooperative one?

I side with @Colleen and say a simple, honest, open conversation about HER life situation to find out what's up.  Don't escalate in a situation that does not require it.  (And try to keep perceived slights of rudeness and emotions out of the equation, they will not help resolve this.)

To date there has been $0 lost from this situation.  Your tenant, with two good years of regular, on-time payments, has earned a right to be treated more kindly than given an all-or-nothing ultimatum.  

Good tenants are gems, keep them safe and happy for as long as you can.

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  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    12y

    I'd send her a notice saying her rent will increase by $75 per month for month-to-month starting Sept 1, but you are willing to keep the same rent she's paying now if she signs another one-year term by Aug 1.  Include both options and see which one she chooses or if she gives notice by Aug 1 for September to avoid the increase.  She might be moving in 3-4 months so doesn't want to sign another year lease, in which case you'll make some extra rent for turnover costs before she leaves.      

    3Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    12y

    I suspect that there is some reason she wants to go month to month and she is not bringing it up to you because she is not anticipating a good response.  Are you willing to do a month to month or shorter lease for an in place tenant?  I would go to her with the lease and ask. Something like you don't seem willing to sign this, are you planning to move? You probably want to find out why.   If she has been a good tenant and is still paying you might want to extend some flexibility. However if what she wants isn't acceptable to you- negotiate or impose your terms.  In this case though if someone said I want 3 months as I am moving out of state etc I would work with them.  I wouldn't push them to move unless what they are proposing is really not going to work for me. (say a Christmas vacancy).   if this is not going on so long though you could also chalk it up to procrastination.

    1Reply
  • Darron Stewart
    Investor · Hattiesburg, MS · Member since 2014 · 280 posts · 98 votes
    12y

    @Leo M. I tend to agree with @Lynn McGeein but would give three options, something like:

    I have enjoyed you as a tenant and want to extend several options to renew or end our rental relationship:

    1.  Renew and extend expiration of lease for 1 year at no rate increase

    2.  Change to a month to month at a $75 increase allowing termination with a 30 day notice from either party

    3.  End the rental agreement as specified in the latest signed copy

    I understand your situation may not allow you to easily commit, but I need to plan for your stay or start preparing for the next guest in this unit.

    Side note, my Dad is from Beaver Falls, PA and now lives in DC area...small world! 

    0Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    Replies appreciated!   I did leave a voicemail telling her I was willing to be flexible if she was planning on moving including month to month.   No reply.  It could well be procrastination.   Of course when  something needs fixed my tenants don't hesitate to call etc.  I suppose I am most irritated by no reply to my flexible and reasonable request.  I find it rude.  I have been trying to get her to sign or at least reply for one month now.  

    I could let it go as she is obligated by the prior lease terms by PA law and worst case she moves in January which is unlikely.  I think I will try again to meet with her face to face and see what she has to say and then I will send a certified letter to sign or pay a higher monthly rent.  I like that idea.  

    The old lease had provisions for raising the rent at any time.  So now we are month to month I will copy that section of the lease, mail it to her certified along with a letter stating her options.

    Thanks, it got me on the right track and I think it is fair for me and the tenant.

    0Reply
  • Michael Nemeth
    Residential Real Estate Broker · Washington, DC · Member since 2014 · 27 posts · 16 votes
    12y

    I don't understand the need for cornering a good tenant and forcing her hand.  What is "won" by doing that?  To turn a good tenant into a longer-term, uncooperative one?

    I side with @Colleen and say a simple, honest, open conversation about HER life situation to find out what's up.  Don't escalate in a situation that does not require it.  (And try to keep perceived slights of rudeness and emotions out of the equation, they will not help resolve this.)

    To date there has been $0 lost from this situation.  Your tenant, with two good years of regular, on-time payments, has earned a right to be treated more kindly than given an all-or-nothing ultimatum.  

    Good tenants are gems, keep them safe and happy for as long as you can.

    5Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    12y

    If you were not comfortable with her becoming month to month after the end of the lease then you should have structured your lease to have an auto renew clause where the lease automatically renews for another 12 month term unless either party gives written notice 60 days prior. The tenant is not "making the rules or running your business", If she's paying on time then she's still abiding by the lease terms of the lease that you gave her. 

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    12y

    Although I agree with @Chris K. that the lease should have an automatic renewal clause in it, you also have to make the renewal happen with a sizable escalation in rent. 

    I have previously posted how I handle this in his other thread:

    http://www.biggerpockets.com/forums/52/topics/7724...

    This of course is too late for the situation that the OP now has. 

    1Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    Good information.  My lease is structured by attys for a large landlord association.  It gives an option to renew and the tenant was to notify me 60 days prior to the end of the term of her intentions...stay, or go etc.  The lease also allows for rental increases at anytime during the term.  So by failing to send in the renewal, yes the tenant is making setting the rules to a degree, albeit not the worst issue I agree.

    I do like the idea of the auto renewal though as steve noted ( and I read the older post ) and will contact the landlord company and see if they have any like that or I can create my own.

    I also hear what Mr. Nemeth is saying ( which is partly why I put the post up ) but if she is planning on moving say in November, I'd rather some of the propane be covered vs me trying to rent the house near the holidays.  I keep my rentals in excellent condition, perform almost all my own maintenance and am kind to my tenants.  But I only have bad memories of "good tenants or bad tenants" whom I have let dictate the terms of the lease.  I personally do better when I stick to a consistent format/system for all my units.  Why should this tenant not have to sign and my other very good tenants have to sign my leases? 

    I have actually had tenants in the past say " hey you didn't raise their rent" or I don't have a new lease so I have all the rights".  Absurd as it was  it led to the tenants thinking that I had discriminated in someway  or in the last case that they could do as they pleased ( false, but that was their perception and they had paid on time for 5 years ).

    So I don't like to give different tenants different treatments when it comes to the basics such as contracts. And I'd rather have the house empty now in july/aug than have a surprise in November by going month to month unless I am being paid a larger rent for doing so.

    Thanks for all your responses, all were very helpful.

    1Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    If the tenant paid on time for two years let the tenant go month to month. Just remember if a tenant decides to move a lease will not mean anything to them.


    Joe Gore

    0Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    Just an update on my tenant situation...it might be useful for others in the future.  Yes an auto renew is a must so I am adding that to my lease.

    But here is how things went.

     I sent one letter that was polite and gave room for negotiating a new lease etc.  Crickets.  No call, zip. 

    So I followed this up quickly with a nonrenewal of lease letter which included a possible eviction warning.  Amazing...she replied, yep she is moving but failed to communicate that to me until I she felt her credit might get hurt. 

     She noted that she did not have a lease so the 60 day requirement to notify me didn't apply.  While she was wrong technically it doesn't matter.  What it shows is that you must make the tenant renew or move.  No holdover tenants even if they have the rent every month.  Had I waited she would not have give me a notice of her intent to move.  So lesson learned.    A new lease/auto renewal, then on letter but not more than two is my advice and the 2nd with a firm time limit before you begin an eviction proceeding. 

    I know others feel different or have a diff policy but be careful with not keeping your tenants lease up to date.  If they care about their credit you might have more luck getting some reasonable communication from them.

    Also I had obtained 1st and last months rent and security.    I am out nothing by doing so in this situation.  In PA you can get as much prepaid rent as they can pay, which is better than a security deposit in some instances.

    Tks again.  Lots of great advice.

    0Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    It is a shame a new landlord will treat a paying tenant like crap. Now when she moves, and your next tenant is a crack head and stop paying and damage your property you should be happy.


    Joe Gore

    1Reply
  • Jason Quick
    Investor · Sarasota, FL · Member since 2014 · 13 posts · 7 votes
    12y

    My advice as a real estate attorney, find a real estate attorney to draft a decent residential lease at a flat rate. Going it alone and using preprinted forms is a recipe for inconvenience, such as the case at hand. With that being said, I think you should ask yourself what you really want here. Do you want someone paying the rent and not causing you problems, or a potentially lousy new tenant who is following your system?  What is the real objective? The grass is always greener. . .

    1Reply
  • Chris K.Pro Member
    Investor · Baltimore, MD · Member since 2012 · 1k+ posts · 655 votes
    12y
    Originally posted by @Leo M.:
    Or keep collecting since she pays every month and is otherwise hassle free.

    Originally posted by @Leo M.:

    So I followed this up quickly with a nonrenewal of lease letter which included a possible eviction warning.  Amazing...she replied, yep she is moving but failed to communicate that to me until I she felt her credit might get hurt. 

     So what type of tenants are you looking for since you seem to push out the ones who pay on time and are otherwise hassle free?? You threatened eviction which means you would have had to refuse her payments to proceed which seems counter productive to having an investment property. How exactly were you going to hurt her credit if she was paying on time every month??

    1Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    "It is a shame a new landlord will treat a paying tenant like crap. Now when she moves, and your next tenant is a crack head and stop paying and damage your property you should be happy."

    Joe, I am hardly new at this as you assume.  ( New to this site but not new as you state, not sure why? )  My family has been in real estate since the 1950s and I am 3rd generation.   Tenants do pose unique situations to all owners/investors and so I was simply deciding if I should enforce my lease and systems or allow the tenant to decide how things should play out.  I am very happy that I did not allow this tenant to skip out on me or remain as a holdover.  I have many past tenants who I am now friends so assumptions on how I run things are not helpful.   

    I appreciate the other replies .  I do use an excellent real estate law firm and a landlord service company that provides excellent leases and other services such as credit screens to avoid crackheads, damage etc.  Both firms have great leases.  I only need to ad an auto renewal to make my leases complete.  I often use addendums to permit pets and other circumstances as well. 

      I have had few problems as a landlord and I credit this largely to following legal advice and having a management systems in place.  But situations arise where I think of deviating from my systems which is why I made my original post.  On occasion I have deviated to accommodate a tenant.   For instance I had a tenant who lost his job last winter.  He contacted me and explained.  He was with me for 5 years so I let him move without any problems and leased the place in in Feb with no problem.  My systems said no he can't but you have to work outside of that framework at times I agree as others posted. 

     I attempted the same with this tenant but she felt no need to have any sort of dialogue.  What did I have to gain by playing nice?  Nothing, no goodwill as she had already planned on moving. 

    As to her credit rating, had she stayed as a holdover and ended up being evicted I would have posted it with the landlord service and had my attorney file the eviction for the world to see on a credit report.  If I have to spend money to get someone to communicate and go to the point of an eviction then they should not be surprised when their credit stinks. 

    I am fine with an empty house for a bit.  Greed makes one hope they get just one more month out of a tenant or let the tenant dictate/change the contract.  Or the owner/investor is so overleveraged that they have to keep every tenant or risk being evicted themselves. 

     I may not be as flexible as others on this site but it works for me and for the majority of my tenants.

    LM

    2Reply
  • Mike H.
    Rental Property Investor · Manteno, IL · Member since 2009 · 2k+ posts · 2k+ votes
    12y

    There are definitely two issues going on here:

    1) The tenant needed to respond. Whenever they don't response, the landlord is somehow getting put out.

    2) I disagree with the notion of renewing the lease when it ends. I don't want my tenants on year to year leases. The only reason I do it up front is for the banks. 

    Tenants can leave any day they want and my chance of collecting anything is slim to none. Not to mention its not like I'm allowed to go after the entire remainder of the lease. Only that amount that the house remains vacant until I find a new tenant.

    In this case, I agree that I still want to know if you're moving. But if you tell me you're moving and want to stay on a month to month, I let you. Why not? As long as you're paying, thats only helping me push out the turnover that much more.

    I actually had a tenant tell me back in february that they were going to be moving. Their youngest boy was having problems with the school. I told them just let me know and they can stay as long as they want. We're now into August and they're still there and they pay like clockwork.

    Had I given them the notice, they would be gone and I'd have had to eat a month's worth of vacancy plus the make ready costs. 

    So sometimes, I don't think a better lease or an attorney is always going to be the solution. I think a lot depends on your business model and how you want your rentals to run. 

    For me, I like all my tenants being on a month to month. Then I can get rid of any of them if they become difficult tenants (i.e. habitual late payers). Which is only fair since they can leave at any time in a one year lease with very little actual recourse for me to pursue.

    0Reply
  • Elizabeth Colegrove
    Hanford, CA · Member since 2013 · 5k+ posts · 1k+ votes
    12y

    @Leo M. 

    While this won't help your current situation. All my leases have m-to-m at an automatic $300 increase inorder to prevent this issue! This way the tenants have incentive to sign a new lease.

    0Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    When gouging someone with a $300 increase on month to month if they don't sign a lease that will give them the incentive to move and everyone wonders why landlords get a bad rap from tenants.


    Joe Gore

    0Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    That would work as well....something that gets their attention.  The leases I use are from a professional landlord agency but lacked my attys auto renewal so I just need to add a provision like that which my lawyers lease did have.   

    Thanks

    0Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    Joe, I appreciate what you are saying but the main whole point is to give the tenant some incentive to sign.  If I desire a yearly lease and that is the agreed upon contract why would I do anything less than agree to and enforce the terms bargained for.  Otherwise I see little need for a lease.

    It is pretty simple.   Sign the new lease or find a new home.  Eviction is a last resort and I am sure the $300.00 bump in rent is a last resort as well.  But otherwise some tenants simply will not enter into any reasonable discussion regardless of how well you have treated them and maintained their residence.  I personally like the auto renewal but until this instance never had anyone not sign.  I have had them sign a bit late but never not sign.  Perhaps it is my area, nice properties vs say section 8?  Not sure, but it is not something I encounter much. 

    0Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    @Leo M.,

    I understand your point. Signing a one-year lease or month to month does not guarantee you that tenant will stay one day or one year.


    Joe Gore

    0Reply
  • Account Closed
    Investor · NY · Member since 2014 · 74 posts · 49 votes
    12y

    Tenant pays on time and doesn't want to talk to me. If only every tenant I ever get is like that, I will die a happy man! As others have said, even if the tenant were to sign a new yearlong lease, they could move out in the middle of the night any time they want. Why push their hand and force them to make a decision when they, from what you have said, have otherwise been model tenants?

    0Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    Just to add to the topic a bit....The reason my landlord agency does NOT auto renew is to avoid problems with changes in landlord tenant laws, increases in expenses or to simply be able to take back control of the residence without giving any reason for nonrenewal. 

     A tenant that will not sign a new lease is a probably a red flag as it is a very simple process and unless they are planning on bolting will want to sign up again.

    So there are many options.  Auto renewal, new lease each year or rent increase if m-m and I am sure many more creative methods to run your business.

    0Reply
  • Mark Whittlesey
    Real Estate Investor · Encinitas, CA · Member since 2013 · 225 posts · 91 votes
    12y
    Originally posted by @Leo M.:

    I am in PA so we are now on a month to month lease by state law which is not the worst scenario.  However, I do not like the tenant "making the rules or running my business".  On the filp side she has never been late and I am still collecting.  Of course I let this slide and then it could start a trend.

    Should I send a her a notice to sign or move ( I have all my tenants sign a waiver of right to quit, therefore no notice needed to evict ).  Or keep collecting since she pays every month and is otherwise hassle free. 

    Thanks, it's a bit of a dilemma in that a paying tenant who causes no problems is generally a good tenant and I'd like to keep them but I also like my rules/systems.

    LBM real estate investor

    Not sure why this is an issue.

    She isn't running your business. She is exercising her rights under tenant/landlord law. She is not required to agree to a new a lease.

    If you want or need a lease on this property then you need to provide her the correct carrot or stick in order to do so. That is you running your business.

    Having said that I don't know why you would. In very general terms, leases benefit residential tenants more than they do residential landlords.

    And why in the world would you ask her to move out if she is paying on time and causing no problems? Is that not the type of tenant you want to atrack?

    1Reply
  • Account Closed
    Investor · Baltimore, MD · Member since 2014 · 1k+ posts · 688 votes
    12y
    Youre asking a question you need to answer
    0Reply
  • Leo M.
    OP
    Beaver Falls, PA · Member since 2014 · 11 posts · 9 votes
    12y

    Joe,

    I agree in large part but I think it is a matter of style of management, I do not think everyone is as far apart as it might seem.  Some may prefer contracts in writing, some verbal or none.

    Matthew,

    I agree with one exception. This tenant was planning on moving.  That's great.  I hope she has a great new home, really I do.  But my point is that since she was planning on moving I just needed to know so I could get ready to rent it again.  So had I not forced her hand I am not sure she was going to tell me until the last minute. 

       Her understanding was that the 60 day notice to renew by both parties was no longer in effect since the lease was up.  To her, no lease meant no rules.  Sometimes this is a psychological exercise vs. a legal one.  Legally she was wrong.  But if I had the up to date lease she may have viewed things differently although no real legal change had occurred.

    But yes, the less interaction I have with a tenant the better I like it.  Usually means things are going smoothly.

    LM

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