Step 8: Handling Lease Endings

Ending a lease with a tenant is a crucial aspect of being a landlord. Whether the termination is voluntary or involuntary, it's important to know the steps to take to protect your property and financial interests. This guide—based on information from Fannie Mae—will help you in handling proper notices to conducting move-out inspections, managing lease endings requires careful planning and a clear understanding of your legal obligations.  

Voluntary Lease Endings 

Tenants may choose to leave at the end of their lease term or give notice to vacate in a month-to-month agreement. Here’s what you should keep in mind: 

Ending Month-to-Month Agreements: In most areas, you or your tenant can end a month-to-month tenancy by providing the required notice, typically 30 days. This notice should clearly state the date the tenancy will end. Some locations with rent control laws may require specific reasons for ending the tenancy, so it's advisable to consult your attorney or local landlord association to ensure compliance with local regulations. 
 

Ending Fixed-Term Leases: Fixed-term leases generally bind both parties until the lease term expires. At the end of the lease, you can either renew the lease, switch to a month-to-month agreement, or have the tenant vacate the property. It’s recommended to send a reminder to the tenant about 60 days before the lease ends, allowing time for negotiations or preparations for their move-out. 

Involuntary Lease Endings 

Involuntary lease terminations occur when a tenant fails to meet their obligations, abandons the property, or if eviction is necessary. 

Handling Early Vacancies and Abandonment: If a tenant leaves without proper notice, they are typically still responsible for paying rent through the notice period. However, you are generally required to make reasonable efforts to re-rent the unit to minimize losses. It’s best to document all steps taken to re-rent the unit to protect yourself in case of disputes. 
 

Evictions: Evicting a tenant is often a last resort due to its complex and costly nature. Common reasons for eviction include non-payment of rent, lease violations, or illegal activities on the property. Before starting an eviction, consult with an attorney to ensure you follow the correct legal procedures. 

When Tenants Leave: Key Steps 

Whether a tenant leaves voluntarily or involuntarily, following a set process can help avoid disputes and ensure a smooth transition: 

Inspect the Unit: Conduct a move-out inspection to assess the property’s condition. It's beneficial to perform this inspection with the tenant present, documenting any damage or cleaning required. Use an inspection report and consider taking photos to serve as evidence if disputes arise. Discuss any deductions from the security deposit with the tenant and have them sign the inspection report. 
Return the Security Deposit: Most states require that you return the unused portion of the security deposit within a set timeframe. This should include an itemized statement showing how the deposit was applied to unpaid rent or damage repairs. If the tenant's deposit was not designated as "last month’s rent," you are not obligated to apply it as such, unless the tenant requests and it complies with local law. 

Handling References for Former Tenants 

You may be approached by other landlords seeking references for your former tenants. It’s advisable to consult with an attorney to understand what information you can legally share, ensuring you provide accurate and fair assessments while protecting yourself from potential liability. 

Legal Considerations and Compliance 

Always check with legal professionals to understand state and local regulations regarding lease terminations, security deposits, and eviction processes. This ensures that you remain compliant and reduces the risk of costly legal disputes. 

Properly managing lease endings and evictions is critical for maintaining your rental business, but it can also be time-consuming and complex.