Landlords should take certain steps when the lease agreement is approaching its natural expiration. Questions arise relevant to how the landlord should handle the end-of-term situation so that proper notice can be delivered to the tenant about the landlord’s actions and what is to be done with the tenancy when it expires. This article addresses some important procedures for the landlord to take.
Lease Renewal Considerations for Landlords
- Landlord should perform due diligence to determine if the landlords want to renew the lease term or not with the tenant.
- Landlord should send proper notice to the tenant based on the landlord’s decision of renewal, month-to-month, or termination.
- Landlord should use the lease renewal situation to “level the playing field” and update lease terms with the tenant
Landlord’s Due Diligence Before Renewing Tenancy
About 3 months prior to the end of a 1-year lease term, the landlord needs to decide what he or she wants to do with the tenant’s tenancy at its natural expiration.
To make that determination, the landlord needs to perform some due diligence, including reviewing the tenant’s rental history, inspecting the property to ensure the tenant has cared for the property, requiring the tenant to update his financial situation and submitting to a new criminal background check, and determining what the new rental rate will be upon renewal.
Other factors may contribute to the landlord’s decision to renew or not include the landlord’s desire for vacancy rates, portfolio health, refinancing plans, etc.
Landlord to Decide What to do With the Tenancy
Once the landlord has performed due diligence, the landlord should decide how he or she wants to treat the tenant’s tenancy upon its natural expiration. The following are common scenarios that the landlord may choose.
Option 1: Terminate the lease term without giving the tenant any option to renew or go month-to-month
Option 2: Terminate the lease term giving the tenant one option: go month-to-month
Option 3: Offer a very specific renewal period (e.g. 14 days, 1 month) after the lease term has expired (this is an unusual scenario; you need to be careful with this type of extension, so be sure to get legal advice first)
Option 4: Give the tenant options of renewal: 1) lease term or 2) month to month
The option the landlord chooses will determine what notice he or she should give to the tenant prior to the natural expiration of the lease.
Tip: The notice landlord delivers must be correctly worded because it will be considered either a legal demand for the tenant to vacate or part of a contractual term for a new tenancy.
Landlord’s notice must be delivered to the tenant timely, according to your lease agreement and pursuant to F.S. 83.575 (see below).
Notice to Tenant
The notice the landlord delivers to the tenant must comply with the lease provision regarding the treatment of the tenancy at the end of the lease term. For example, if the lease requires the landlord to give the tenant 60 days’ notice of non-renewal, comply with that lease provision.
If the landlord misses the deadline to give the tenant notice of non-renewal, the tenancy will become month-to-month at the natural expiration, and the landlord will then have to give at least 30 days’ written notice prior to the end of the next monthly rental period to the tenant to terminate the month-to-month tenancy. See article and F.S. 83.57.
If the lease automatically terminates at the end of the lease term (without notice from landlord), the landlord should decide if he or she wants to make an offer to renew on a new lease term or go on a month-to-month basis. If the landlord wants to make an offer to the tenant for a new lease term or to go month-to-month, the landlord should send the offer to the tenant in sufficient time for the tenant to accept or reject the offer. A sample Offer to Lease is below.
If the landlord wants to terminate the tenancy at its natural expiration, whether the lease agreement has an automatic lease termination provision or not, the landlord should timely deliver notice to the tenant that he must vacate at the end of the lease term. A sample Notice of Non-Renewal and Demand to Vacate is below.
A sample notice the landlord can send a tenant whose tenancy the landlord wants to renew on a new lease term or on a month-to-month basis is below. This sample notice combines both the landlord’s F.S. 83.575 notice to the tenant and of the landlord’s willingness to consider offering the tenant a renewal, whether on a specific term or month-to-month basis.
Keep in mind, the sample notice below is not an offer to lease for a new term, but rather is a notice to require the tenant to notify the landlord of the tenant’s intention. Once the tenant notifies the landlord of his intention, the landlord can make a final decision about whether to offer a new lease term (or month-to-month tenancy) or to terminate.
Tenant’s Notice Of Intent To Vacate and Liquidated Damages
If the lease agreement has a provision that allows the landlord to charge the tenant liquidated damages for the tenant’s failure to deliver written notice to the landlord of the tenant’s intent to vacate at the end of the lease term pursuant to F.S. 83.575(2), the landlord must comply with that statutory provision.
In summary, the landlord’s F.S. 83.575 notice must:
- Be in writing
- State the tenant’s duty to give the landlord written notice of intent to vacate
- State the fees and penalties that apply if the tenant does not give proper and timely notice
- Must be delivered to the tenant within 15 days of the beginning of the tenant’s obligation (e.g., if the tenant’s obligation to give notice of intent to vacate is 30 days prior to the end of the lease, landlord must deliver his written notice from day 45 to 31 prior to the end of the lease)
- Note: under subsection (1), the tenant’s obligation to give written notice of intent to vacate or not cannot be required to be delivered to the landlord more than 60 days and not less than 30 days prior to the end of the lease term.
See Sample Notice above: “Notice Of Tenant’s Duty To Notify Landlord of Intent To Terminate Lease Upon Its Natural Expiration”). If the landlord does not deliver written notice as required by F.S. 83.575(2), the landlord cannot charge any fees or penalties for the tenant’s failure to give notice of intent to vacate.
After receiving the tenant’s notice of intent, the landlord can deliver formal notice to the tenant based on what the landlord decides to do with the tenancy.
Of course, if the tenant notifies the landlord that he intends to vacate at the end of the lease term, the landlord should respond by delivering notice to the tenant that the landlord is relying on the tenant’s notice of intent to vacate and that the lease will be terminated at the end of the lease term. For example:
Property Manager Must Communicate with Landlord Before Tenant Notice
Property managers need to contact the landlord about his or her intent of renting the property for a new term, prior to offering the tenant a new term. The landlord may, in fact, not want to rent the property again (e.g. he may want to move in).
You can avoid a big problem by informing the landlord of your intent to renew the lease term of the tenant or a new tenant and require the landlord to respond to your notice within the number of days that your property management agreement requires the property owner to respond. For example, you may send an email to the owner stating the following:
“The current tenant’s lease agreement naturally expires on [date], and we intend to make an order to renew this tenant, but if the tenant does not renew or extend the tenancy, we intend to market the property to a new tenant on a year term. Unless we receive notice to the contrary within [#] of this notice, we will proceed accordingly.”
Avoid Miscommunication with the Tenant
If a tenant sends the landlord an email or text asking questions about extending the lease, terminating the lease, the vacate date or lease termination date, the landlord needs to refer the tenant back to the lease agreement and inform the tenant that he must follow the agreement.
Never state anything to the tenant that contradicts the lease agreement. If the landlord discusses the end-of-lease situation with the tenant, the effect of which allows the tenant to rely on the landlord’s statements or promises to do something contrary to the lease agreement, the landlord will create a messy situation to deal with later, and it may be a costly conversation.
Level the Playing Field
The time for lease renewal is a great opportunity for the landlord to amend or add to the lease agreement and to bring the tenant into compliance with defaults.
Amended Lease Terms
If the tenant is on an old lease that needs to be updated, or if there are important lease amendments that need to be implemented, the landlord can use the end-of-lease situation to send the tenant an updated lease agreement to be able to renew the lease term or even for the month-to-month tenancy. This is the time to do this; don’t miss the opportunity.
Cure Opportunity
If the tenant wants to renew but has unfulfilled duties or owes money, use the lease renewal situation to bring the tenant into compliance. Be sure to condition any renewal offer on the tenant’s being compliant with outstanding obligations.
Conclusion
Handling the end of lease is very important. Landlords should have a process in place to cover the variety of considerations relevant to renewing or termination the tenancy, conditions the tenant needs to meet to be able to renew, incorporating a new lease or new lease terms into a renewed tenancy, adjusting rent, and giving the tenant incentive to cure any defaults that need to be cured before being able to renew. These steps will help put the landlord in a better position for the next lease term or get the tenant out so a new and better tenant can be placed in the property.
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