I was thinking about using some cliche’ to start this post off with like:  “You can’t teach old dogs new tricks” or “you are never too old to learn”, but I just couldn’t bring myself to do it!  I was invited to a training course about a month ago that was sold as landlord training.  The cost was $45 but the speaker wanted me to attend to see if it was something that I could recommend to my investors and blog readers.

I attended this seminar last week.  I was very skeptical that this wasn’t going to be much more than a very basic landlord class.  Boy was I wrong!  This class was informative and interesting, even for me (a guy that has owned lots of rental properties and helps investors get started as landlords almost daily).  This class is actually taught by an attorney from the Home Line Tenant Hotline.  They provide free legal advices to tenants and will even help them in court in certain situations.

The speaker was one of the attorneys from Home Line.  He was engaging and interesting, but what I found fascinating was how he and his peers looked at different situations that we as landlords encounter every day.  He was able to show how they defend the tenants by using the landlord’s ignorance of the laws and statutes.  A couple quick examples were:

• They are often able to have leases invalidated because the landlord has a PO Box as the mailing address (when the state statute requires a physical address).  I realized that I was taught as a landlord to use a PO Box to get your checks.  I am sure there are many other landlords out there that are breaking this rule.
• If your lease converts to a month to month lease for a tenant, you legally must send them a written notification 75-90 days prior to the expiration of the lease telling them about the automatic renewal. This notification can only be sent during that 75-90 window and must be sent via certified mail or personal service.  How many landlords do you think actually do all those steps?
• If you have  tenant that stays on past the end of the lease, they are a hold-over tenant.  If you accept money from them, you have entered into a new oral lease and you can not evict them.
• We also discussed many other legal issues such as fair housing and discrimination.

These and many more gaps/problems in landlord procedures were pointed out to us in class.  I was writing furiously because I could see places that I needed to shore up my processes to keep myself protected.  Not only could this information help you be a better landlord, it may help you stay out of court!  I recommend that every landlord take this class.  It was invaluable.

You decide to not renew your tenant’s lease for any number of good reasons (noise complaints, consistently late payments, dirty apartment, etc).  After you notify them of your decision, they stop taking your calls and don’t answer the door when you stop over.  They need to vacate their apartment by the 31st.

Ultimately, you find a new tenant, that you are excited about, to move in on the 1st of that next month and sign a lease.  You show up on the 31st at 5pm and are surprised to see that the outgoing tenant is still there, has not packed a box, and says that they are staying.  Now What!

Well, I have some ideas on “Now What!”, but let’s back up and examine the process from the beginning and let me show you how you can put contingency plans in place to reduce your risk of having a “Now What!”

Prior to telling the tenant you are not renewing their lease:

• Tour the unit (apartment) looking for any work that may need to be done for a new tenant coming in.  Painting the entire unit may be tough, but how about fixing all those other items?  This will speed up the turnover and possibly put the existing tenant in a better mood.
• Chat with the tenant informally about their plans to renew the lease.  See if they are thinking about a larger/smaller place, different neighborhood, and such.  Maybe they just need a little coaxing to move on their own.

How to tell the tenant you are not renewing their lease:

• I suggest that you do this verbally first, as it is easier to quickly explain the situation, it is less formal and more personable.
• Always follow up with something in writing (tell them you are sending it).
• Give 61 days notice.  This should work legally in most states and it is neither too long nor too short.
• Call them back in a week and see how they are coming on finding a new apartment.  If they are not taking your calls, stop by.  If they won’t answer the door, you should start preparing for the worst.

Preparing for the “worst”:

• Work hard to get in and speak to them.  Use your best negotiation skills.
• If you can get them talking and they are telling you directly that they are not going to move, consider giving them an incentive such as all their damage deposit back regardless of the condition of the property (within reason).  Offer to give them $200 toward a U-Haul or moving company of their choice (pay money to movers directly).
• This is going to sound harsh, but consider a pre-emptive strike:  If they are late or past due on their rent or violating any part of the lease, think about evicting them (or threatening to evict them) early.
• Do not lease the apartment to anyone needing to move in immediately after the existing tenant is supposed to leave.  This step will cost you at least one month of lost rent, but will prevent the “Now What!” situation above.
• Have your attorney draft a letter simply reasserting the lease ending date and what will happen if they do not move.
• Research how to evict a “Hold Over” tenant so you are prepared if they stay.
• Typically, the lease that is in place will convert to a month to month lease with the same conditions, rules, and requirements.  Some leases will allow the landlord to raise the rent once the lease expires.  Examine your lease and use it as leverage.
• If the tenant receives any public assistance, contact their coordinator and see if they can provide any help or leverage to get the tenant to move on time.

The morning after (they didn’t move out):

• In every state, tenants have rights.  These rights are to protect the tenant from the landlord simply walking in and moving all the tenants furniture to the curb on the morning after.  If you did your research above, you should know what both your rights and the tenant’s rights are.
• If your lease allows you to change the rent amount, notify the tenant of the new rent amount.  Try to use any other provisions in the lease as leverage.
• Put your “Hold Over” tenant eviction plan into motion.  How long this will take varies by location and even time of the year.  In Minnesota, it can take up to 1 week (and in some cases longer).

Having a tenant refuse to leave once their lease expires can be a stressful event.  There are many unknowns and turns in the road.  By being prepared as early in the process as possible with good contingencies, you should be able to avoid the “What Now!”.