Not renewing a lease - elderly tenant? Advice pls!

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Not renewing a lease - elderly tenant? Advice pls!

Kristine Libby
Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes

Hey guys, 

Wanted to get your feedback on something. My husband and I own a SFH in the Bay Area and we're considering not renewing an annual lease. Our current tenant has been there for about 3 years now. We're on the fence though and wanted to get some suggestions on what other people think.

Reasons to NOT renew:

- She's currently paying way under market (We estimate we can get another $350 - $400 / monthly)

- She is really tardy with her utilities and even had a lien placed on our property back in April.

- She calls us for a lot of minor maintenance issues (we're fixing something about every 3 months).

Reasons to renew:

- She's in her mid-60s and her dad lives with her.  We just feel bad kicking them out with the rental market being so competitive in the area. (She does have a few children in the area, so she might have some options).

- Cost of vacancy + risk of not being able to rent it out.

We were thinking of giving her 3 months notice and using the reason of the lien and that we want to do renovations on the property.

Some of my concerns are:

- She might try to find a way to sue us.  She seems pretty litigious.  (Can she sue us if we're just not renewing)?

- She might do something to damage the property (more than the value of her security deposit).

- She might not pay her utilities.

- She might refuse to leave.

Has anyone dealt with this in the past? If so, what did you do?  We're trying to do what's right, while still making good business decisions.

Thanks!

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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y

If, as Arlin states, you can raise the rent do it.

Make sure you know the law and then if allowed raise her rent $400. She will likely leave but if not you need to begin intensive tenant training.

If you have owned the property for three years you are the problem, not the tenant, due to poor tenant management.

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  • Arlen Chou
    Investor · Los Altos, CA · Member since 2014 · 942 posts · 1k+ votes
    9y

    @Kristine Libby Because it is a SFR, life is easier for you, but it does not mean you are in the clear. You are able to raise the rent without any issues.

    At the very least, you need to be documenting the issues and giving notices each and every time she breaks a rule.  It sounds draconian, but the sad reality is that the friction between landlords and tenants is so bad that you need to have that documentation in place for the potential of litigation.

    If you are going to evict her, then you might want to approach an attorney and have them guide you through the process.

    1Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    If, as Arlin states, you can raise the rent do it.

    Make sure you know the law and then if allowed raise her rent $400. She will likely leave but if not you need to begin intensive tenant training.

    If you have owned the property for three years you are the problem, not the tenant, due to poor tenant management.

    3Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    Thanks @Arlen Chou.

    We definitely have documentation (emails / texts back and forth) about the non payment of utilities.

    Are we able to just let the lease expire and choose not to renew? Then repost it for higher rent?

    0Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    @Thomas S. - Agreed. We thought about raising the rents on her, but we're not too comfortable with her financial situation and we don't think she can stomach the increase.  

    The first 2ish years were smooth - the last year has been really tough though and we wanted to wait out the end of her lease.

    Thanks for your advice!

    0Reply
  • Taylor Ferris
    Real Estate Agent · Oakland, CA · Member since 2017 · 39 posts · 26 votes
    9y
    Even if you decided to "not renew the lease" you can't just kick the tenants out. If there is eviction control in the city you own, which I assume there probably is since the SFR is in the Bay Area, the tenants will automatically assume a month to month lease. If you want them out and they don't want to leave you would most likely need to go through the eviction process which would not be easy because they likely fall under a protected class being over 60 years old. That said as Arlen mentioned since it's a SFR you should be able to raise the rent to market and they might leave. If nothing else you would get better rent. The caveat, I'm not sure if a protected tenant (over 60), is protected from rent increases, anyone know for sure? I'm not a lawyer and nothing Ive said should be taken over what an attorney would tell you. Before you take any steps you should consult with an RE attorney in the area. Some will give you a free consultation especially if it's just answering a couple of quick questions.
    0Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    If you are placing her personal life above your decisions regarding what is best for the business you are in the wrong business. No room for feelings here. Either jack her rent and force her to leave or put their butts on the street. Compassion...forget it, this is business. Money rules.

    You need to first sit down and learn/understand your state landlord tenant regulations. If you do not know your state rules you are playing Russian roulette with your business.

    You need to start taking your business seriously before it is too late.

    2Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    @Taylor Ferris - Thanks for the feedback! I'll look into the county's regulations towards protected tenants!

    1Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    @Thomas S. - Thanks for your input. I believe it's all about finding the balance between profitable business decisions and maintaining good relationships.  

    2Reply
  • Ariel Smith
    Rental Property Investor · San Diego, CA · Member since 2016 · 306 posts · 205 votes
    9y

    @Kristine Libby Which city is your property located in? That would help us a lot with providing feedback

    0Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    @Ariel Smith - Hi Ariel. Our home is in Sacramento.  Thanks for any advice / feedback!

    0Reply
  • Ariel Smith
    Rental Property Investor · San Diego, CA · Member since 2016 · 306 posts · 205 votes
    9y

    @Kristine Libby oh ok that's a little out of my wheelhouse. Some quick research shows that Sacramento doesn't appear to have a just cause eviction law. If this is the case, you would only be required to provide your tenant with a 60 day notice to vacate (since she has been there 1 year+). I'd let her know that the rent will be increasing to X amount at the end of her lease and that if she'd like to stay you can give her the opportunity to pay the increased amount. If not, send her a 60 day notice to vacate the day after her lease term is up and goes month-to-month.

    3Reply
  • Taylor Ferris
    Real Estate Agent · Oakland, CA · Member since 2017 · 39 posts · 26 votes
    9y
    @Ariel Vincent, definitely a good question ;)! I'm not sure about the rules in Sac town. Went to UC Davis and have friends up that way. Definitely love Sacramento but unfortunately don't know a lot about tenants rights for the area. :-P
    0Reply
  • Irina Belkofer
    Real Estate Broker · Cleveland, OH · Member since 2017 · 719 posts · 658 votes
    9y

    @Kristine Libby how it's possible that utility company put a lien on the property?

    Usually tenants put utilities in their name no only water billed back to them.

    Is there something specific to California?

    0Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    Thanks so much for all the suggestions.

    There's a utility in Sacramento (water / sewage) that's billed to the tenant, but if they don't pay, we're still on the hook. The late notices were being sent to the property (we didn't see them).  We didn't find out about it until my quarterly check in.   We now have statements sent to  both the property and us.

    0Reply
  • Account Closed
    Attorney · Sacramento, CA · Member since 2014 · 300 posts · 172 votes
    9y

    I would give her the 60 day notice and find a new tenant that held up their end of the bargain. It sucks that the tenant is older and may have to pay more to live in the same area, but she also seems to have made some mistakes along the way. There's no reason to deal with a headache tenant in this market. 

    0Reply
  • Deanna McCormick
    Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
    9y

    You would be required to give her proper notice for any changes you want to do regarding either non-renewal / notice to vacate  or rent increase.

    Usually with a 12 month lease, a 60 day notice period is required,, so notice is required prior to that,, as a rule of thumb I suggest notices 75 days prior to the lease end, this gives them enough time to submit a vacate notice prior to the 1st.. 

    Download the landlord tenant laws for your State / County so your within your rights .

    As far as letting them stay,, things could be worse with new tenant,, I'd suggest a inspection of property before you decide what to do.. and if you decide to give them the chance with a rent increase, i'd set it at what market should be. 

    0Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    @Account Closed - Thanks for the suggestions. I think that's what we're going to end up doing.

    0Reply
  • Kristine Libby
    OP
    Investor · Pacifica, CA · Member since 2017 · 36 posts · 7 votes
    9y

    @Deanna McCormick - Yup! Downloaded our county's book last night and we're going through it really carefully. It looks like 60 days notice is sufficient, but I agree with you - we're going to give her 75 days so she has more time to find a place to stay & start the moving process. Thank you!

    1Reply
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