Renting out your house in Nashville can be a great way to earn a stable source of passive income and ensure a comfortable retirement.

However, finding reliable, long-term tenants is not always an easy feat. Why is why you want to retain good renters for as long as possible.

You may even agree to allow tenants to stay on your rental after their original lease has expired. While this may seem like a good way to earn income, it can cost you a lot of money in the long run.

Holdover tenancies are associated with many risks, from property damage to higher chances of eviction. Moreover, they mean a loss of money, as dealing with holdover tenants can be a costly and lengthy process.

Luckily there are many things you can do to avoid this problem altogether! In this article, the experts at Brentwood Square Management will go over everything you should know about holdover tenants and how to deal with them.

What Is a Holdover Tenant?

A holdover tenant is a renter who continues to stay in a rental property after their lease has expired without signing a new lease. In legal terms, these renters start a new tenancy at “sufferance.”

Even if they don’t have their landlord’s explicit permission to remain in the property, they can stay as long as they aren’t properly evicted. Moreover, if you, as their landlord, continue to accept rent payments, holdover tenants can continue to legally occupy your property.

Holdover tenants are in a gray area between a rental agreement and trespassing. This can make it especially difficult to recover control of your rental property.

One of the easiest ways to deal with holdover tenants is to stop accepting rent payments and inform them that they’re no longer allowed to stay in the property. After doing this, the tenants will be considered trespassers and you’ll be able to formally start the eviction process.

The Risks of Holdover Tenants

Even if you’ve had no problems with your tenants in the past, allowing them to stay in your rental without a lease can be a huge mistake. After all, holdover tenancies leave you, the landlord, unprotected as there is no lease agreement in place.

Some of the dangers of allowing holdover tenants on your property include the following:

  • Uncertainty: Holdover tenants don’t have a rental agreement in place. This means that there aren’t any terms they should comply with. This lack of clarity can lead to property damage, unpaid rent, and even legal disputes.
  • Loss of rental income: The payment terms, including the price of rent, due date, and late fees, are typically outlined in the lease. Without a rental agreement, these policies cannot be enforced. Because of this, holdover tenants are more likely to miss rental payments.

  • Property damage: A good rental agreement should outline the tenant’s responsibilities regarding property upkeep. Because they don’t have a lease in place, holdover tenants are more likely to damage your property beyond normal wear and tear, since they know they won’t likely face any repercussions.
  • Legal problems: If a holdover tenancy lasts long enough, it can lead to an unwarranted tenancy. This can be extremely difficult to deal with. Evicting a holdover tenant can take weeks, if not months. Plus, this will only give you back control over your rental, but it will not make up for property damage or missed payments.

Dealing With Holdover Tenants Effectively

Dealing with a holdover tenant is never easy. But it doesn’t have to be overly complicated. Below is a step-by-step guide to what to do if there are holdover tenants in your rental.

1. Offer to Draft a Temporary Lease Agreement

Evictions are not the only way to deal with holdover tenants. Sometimes, renters can overstay their welcome due to misunderstandings or because they genuinely want to stay on your rental for longer.

So, it’s important that you take the time to talk with your renters to understand why they haven’t vacated your rental despite their lease expiring.

If you have a good relationship with your tenants and want to retain them for longer, you can offer them to stay in your property as long as they sign a temporary agreement.

This simple rental document can help you outline the terms of their occupancy, including payment policies, the terms of the tenancy, and the tenant’s responsibilities. This simple action can help keep your investment protected until tenants vacate your property or sign a new, proper lease.

2. Stop Accepting Rent Payments

Holdover tenants are legally permitted to stay on your rental as long as you keep accepting their rental payments. As soon as you stop accepting payment, they’ll be considered trespassers, which will make it easier to get them to vacate your rental.

3. Tell the Tenants They’re No Longer Allowed in Your Property

After you stop accepting their payments, you must inform your holdover tenants that they’re no longer allowed to stay in your property. Let them know that they’re trespassing and if they don’t vacate the premises immediately, you’ll begin the eviction process.

You can do this in person, but it’s best to send them a formal letter or notice. This way, you’ll have proof that they overstayed their welcome in case the issue escalates further.

4. Evict the Holdover Tenants

If tenants don’t agree to sign a new lease and don’t vacate your property after requesting them to do it amicably, you’ll have to resort to legal action.

The best way to deal with holdover tenants for good is to formally evict them. Just make sure to follow your local laws to ensure the process is successful and prevent further legal disputes.

Bottom Line

No landlord wants to deal with holdover tenants. After all, this type of tenancy comes with many challenges, including potential income loss, property damage, and long-drawn legal disputes.

Luckily, there are many ways to deal with holdover tenants, such as drafting a temporary lease, stopping to accept their payments, and filing for an eviction.

Now that you know how to deal with holdover tenants, you are better prepared to keep your investment protected and profitable.

Need help dealing with holdover tenants? Congtact Brentwood Square Management Services, Inc.! Our team of experts is well-equipped to help you deal with problematic tenants effectively.