Tenants ignore lease renewal/increase letter

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Tenants ignore lease renewal/increase letter

Pamela W.
New to Real Estate · Burlington MA · Member since 2022 · 26 posts · 15 votes

My tenants' lease ends Aug 31, and although they pay on time and take care of the house, they have been high maintenance, literally, from day one, and their usage of heat and water is much higher as well. The cost of oil, water, and trash pickup has increased, so I increased the rent 8%, the rate of inflation, and sent a renewal notice stating the increase via certified mail with signature receipt, and they got it July1, 60 days before the end of the lease, as it states that either party must give 60 days notice. I asked them to respond by July 7... and I have heard crickets.
They have been highly communicative when they want to complain about something.
I am assuming they are trying to buy a house, as they were priced out last year and ended up renting from me, or they are looking for a better deal, unlikely from what I see, as there are no homes and few decent apartments for rent in the immediate area. I would not be unhappy to see them leave, but would like to plan for upgrades that really need to be done when the house is vacant, and that takes some lead time to setup. My question is, what should I do in light of their non response. Wait a few more days, or until the end of July to start texting them, or just tell them I plan to start showing the house as they have not agreed to the increase. 

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Bill B.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
4y

Hopefully you converted them to MTM at the end of the lease and not another year? 8% rent increase is beyond  generous 20-30% has been the rule here. If it is MTM, assuming they pay the new rent, give it 6 months and raise it another 8% with proper notice. If it’s a year’s renewal you’ll have to check with a local expert as to if you made a legally binding over even before they return it. If not, simply notify them you’re revoking that offer (again after the local expert says you’re giving enough notice.)

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  • Joel Case
    Rental Property Investor · Ocean Springs, MS · Member since 2022 · 349 posts · 301 votes
    4y
    Quote from @Pamela W.:

    My tenants' lease ends Aug 31, and although they pay on time and take care of the house, they have been high maintenance, literally, from day one, and their usage of heat and water is much higher as well. The cost of oil, water, and trash pickup has increased, so I increased the rent 8%, the rate of inflation, and sent a renewal notice stating the increase via certified mail with signature receipt, and they got it July1, 60 days before the end of the lease, as it states that either party must give 60 days notice. I asked them to respond by July 7... and I have heard crickets.
    They have been highly communicative when they want to complain about something.
    I am assuming they are trying to buy a house, as they were priced out last year and ended up renting from me, or they are looking for a better deal, unlikely from what I see, as there are no homes and few decent apartments for rent in the immediate area. I would not be unhappy to see them leave, but would like to plan for upgrades that really need to be done when the house is vacant, and that takes some lead time to setup. My question is, what should I do in light of their non response. Wait a few more days, or until the end of July to start texting them, or just tell them I plan to start showing the house as they have not agreed to the increase. 

    You have sent notice of the increase, do you need a response in your state for the increase to be legal? If not, the second they do not pay full rent you follow your states process for eviction. 

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    You gave them a deadline, contact them and say that as you've not heard from them, you assume they will not be renewing the lease and therefore will be leaving Aug 31.  Hopefully your lease mentioned they need to make it available for showings.  Do a quick inspection if you haven't already to know if you can rent it for Sept 1 or if you need to do some work before renting it out again.

    1Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    4y

    Hopefully you converted them to MTM at the end of the lease and not another year? 8% rent increase is beyond  generous 20-30% has been the rule here. If it is MTM, assuming they pay the new rent, give it 6 months and raise it another 8% with proper notice. If it’s a year’s renewal you’ll have to check with a local expert as to if you made a legally binding over even before they return it. If not, simply notify them you’re revoking that offer (again after the local expert says you’re giving enough notice.)

    2Reply
  • Sergey A. Petrov
    Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
    4y

    are there two different things at play? One being the rent increase and the other being the renewal? Shouldn’t the term auto renew unless terminated upon notice? If that is the case no notice or anyone’s response is needed. If the notice is to increase rent, again it shouldn’t require a response. Not sure if there are local regulations driving something else but my notice would’ve said something along the lines of “as per the existing lease, the renewal is around the corner and the lease will automatically renew for another year. Additionally as per the existing lease, this is your required 60 day notice that your monthly rent is $x effective September 1.” 

    Not sure why I would need any type of a response. Or does the lease say it is for one year and terminates unless either an extension or a new lease is executed at least 60 days prior to the renewal? That wouldn’t be the traditional approach…

    2Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Pamela W.:

    My tenants' lease ends Aug 31, and although they pay on time and take care of the house, they have been high maintenance, literally, from day one, and their usage of heat and water is much higher as well. The cost of oil, water, and trash pickup has increased, so I increased the rent 8%, the rate of inflation, and sent a renewal notice stating the increase via certified mail with signature receipt, and they got it July1, 60 days before the end of the lease, as it states that either party must give 60 days notice. I asked them to respond by July 7... and I have heard crickets.
    They have been highly communicative when they want to complain about something.
    I am assuming they are trying to buy a house, as they were priced out last year and ended up renting from me, or they are looking for a better deal, unlikely from what I see, as there are no homes and few decent apartments for rent in the immediate area. I would not be unhappy to see them leave, but would like to plan for upgrades that really need to be done when the house is vacant, and that takes some lead time to setup. My question is, what should I do in light of their non response. Wait a few more days, or until the end of July to start texting them, or just tell them I plan to start showing the house as they have not agreed to the increase. 


    Why did you offer renewal if they are so problematic? And why only 8%? That doesn't seem sufficient for excess utility use and keeping up with market rates.

    When I send something that requires a tenant response, I include a deadline and a consequence for failing to respond. For a renewal, I offer them three choices:

    Option 1. Renew for an additional year at a rate of $XXXX and whatever other changes I want to implement;
    Option 2. Renew on a month-to-month basis under the terms of #1 but with a rate increase of 25%;
    Option 3. Terminate and vacate no later than 11:59PM on [DATE]

    Tenant has one week to select their option, sign, and return to me. If they fail to respond by the deadline, they are automatically extended under Option 2.

    It sounds as if your tenants want to play this out while they research their options. If you want to get rid of them, this is your chance. Give them written notice that they failed to respond so you are terminating their lease and expect them out by 11:59PM on [DATE]. Tell them you are already scheduling renovations after their departure so this date is non-negotiable. 

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    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y
    Quote from @Sergey A. Petrov:

    Not sure why I would need any type of a response. Or does the lease say it is for one year and terminates unless either an extension or a new lease is executed at least 60 days prior to the renewal? That wouldn’t be the traditional approach…

    In some tenant friendly areas, it is preferable to keep them on a set term lease.  Trying to get rid of a month to month tenant can require you to give them a month's free rent (not cash for keys, but the tenancy act requires it).

    Someone else mentioned the rent increase of 8% being low.  Same tenant friendly area has caps on the increase and this year the max increase allowed is less than 2%.
     
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    4y

    Yes, just move ahead as if they have decided to move on. They are probably ignoring you, hoping the problem will just go away, but you can't let that happen.

    Once you take this course of action they will probably react to you, but if you want them gone, you now have the perfect opportunity....

    0Reply
  • Pamela W.
    OP
    New to Real Estate · Burlington MA · Member since 2022 · 26 posts · 15 votes
    4y
    Quote from @Sergey A. Petrov:

    are there two different things at play? One being the rent increase and the other being the renewal? Shouldn’t the term auto renew unless terminated upon notice? If that is the case no notice or anyone’s response is needed. If the notice is to increase rent, again it shouldn’t require a response. Not sure if there are local regulations driving something else but my notice would’ve said something along the lines of “as per the existing lease, the renewal is around the corner and the lease will automatically renew for another year. Additionally as per the existing lease, this is your required 60 day notice that your monthly rent is $x effective September 1.” 

    Not sure why I would need any type of a response. Or does the lease say it is for one year and terminates unless either an extension or a new lease is executed at least 60 days prior to the renewal? That wouldn’t be the traditional approach…

    The lease is for one year and terminates unless an extension is executed at least 60 days prior to the renewal.
    0Reply
  • Sergey A. Petrov
    Real Estate Consultant · Seattle, WA · Member since 2022 · 1k+ posts · 784 votes
    4y

    Then I suppose a follow up notice might be warranted depending on the wording of the original notice. The follow up could say "as is per the prior notice, you have not responded nor executed the previously offered lease extension therefore the existing lease terminates Aug 31 and your tenancy ends on the same date. Please contact me to schedule a move-out inspection prior to that date otherwise we'll assume you have fully vacated and will perform the full inspection on September 1. Keys, etc. should be sent to.... or you are welcome to leave them on the kitchen counter. Any and all items remaining on the property as of September 1 will be deemed abandoned. We will be following up with the reconciliation of your security deposit within X days as required"

    1Reply
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