Tenants never signed the lease but are still paying rent?

Question

Hello BP community. My dad has been an accidental landlord of a SFH in another state and has been collecting rent through a Property Management Company in the area for the past 10 years. A few months ago my dad and I decided to get ourselves educated about REI and coincidentally noticed that the current tenant is living in the house without a signed lease. This had fallen through the cracks with the PMC and they had never notified us about it. The tenant still pays rent. However, when we asked the PMC to get them to sign the lease the tenant refused. Our PMC advised us to give the tenant a 30-day notice to vacate and we gave them the go-ahead to do so.

Is this a situation anyone here has encountered? Are there any complications you can foresee? The state is AZ. Thanks for reading!

Katie Stewart · Answer

I have to agree with Robert. While I do understand your concerns about them not being on a lease, unless they are causing you problems I would not post a notice. I also would recommend brushing up on Arizona's landlord-tenant laws so that you are prepared in the case that the tenant becomes a problem.

Robert Gilstrap · Answer

@Joshua Penners  If the tenants have signed previous leases and had uninterrupted occupancy of the property and continue to pay rent per the terms of the previous lease and their actions are consistent with the previous lease terms (for instance you have a $50 late fee in a previous  ease and they pay that now even though technically there is no new signed lease) then just about any court will deem them to still be subject to the terms of the lease signed or not . Remember in law, ones actions can constitute acceptance of terms even absent written agreements.

If they never had a lease but continue to pay and stay then the tenant is an "at will" tenant under a periodic tenancy (i.e. month to month). If they pay on time and take care of the property and don't cause issues for you then whats the problem right?You could give notice at any time under whatever your states guidelines are for tenancies at will and terminate the tenancy if you need to (likewise the tenant could also terminate under those same guidelines) so unless you just absolutely feel the need to have them on a lease I don't see the upside. Now if they aren't paying on time or are a pain, not taking care of the property, etc. then by all means put them on notice and they either enter into an agreement or you put them out.

Joshua Penners · Answer

Well, Cat that's part of why I'm posting about it. I thought it was absurd that the tenant didn't want to sign the lease that they've been signing for the past 10 years. Even though they are a paying tenant we didn't know if it could cause problems for us down the road to continue having them living in our property without a signed lease. I wanted to ask BP and see what you guys thought about that.

Joshua Penners · Answer

@Matt K. you're saying let the pm file for eviction? Is that usually what happens? Pardon my ignorance

Matt K. · Answer

Why not let the pm do this since they failed to get lease signed ?

Joshua Penners · Answer

Thank you, Nathan! That sounds like the logical path forward.

Nathan Gesner · Answer

Give the tenant a 30-day notice and hope they move. If they are still there on day 31, file for eviction. The tenant didn't want to negotiate with you so don't negotiate with them. Cut them loose and start over.