We want to explain how the re-leasing process applies to rental properties like yours, where the lease agreement terminates before July 25, 2020. The processes that will be implemented are included in the CARES Act that was signed into law by President Trump on March 27, 2020. Below are a few considerations for the lease negotiations that will occur for your property.
Right to file a notice to vacate
The Act applies a moratorium on evictions for 120 days beginning March 27, 2020, and ending July 25, 2020. There is some overlap between the eviction process and re-leasing process, and we will describe how it affects your rental property. We will also go into our suggestions and recommendations to best work together through this process.
The most significant impact the CARES Act places on the re-leasing process involves the landlord’s right to give notice. If you do not wish to renew to the current tenants, Top Properties would typically provide 60 days’ notice to vacate to the tenants. Our lease agreement establishes a 60 day notice period for either party (tenant or landlord) to give notice to end the agreement. Between now and July 25th, Landlords (and their Agents) are instructed not to provide these notices.
How this affects properties with lease agreements ending during 120 day period
The intent of the CARES Act is provide stable housing for Americans during the disaster period. What this means for landlords is that we will be unable to serve current tenants a notice of lease termination during the 120 days.
Top Properties is working hard for our property owners at this time. We are working with lawyers and real estate advisors to offer options for you to navigate these new rules with the best outcome. As this is a federal act, it applies to almost every home owner, and our legal team has advised us treat all properties and tenants the same.
Tenants Giving Notice
As your lease comes to an end, tenants will still have the ability to provide notice of lease termination.This notification requirement, per our current lease, is a 60-day notice requirement. If a tenant gives notice of non-renewal, the process moving forward will be business as usual.
What if Tenants Do Not Give Notice
If the tenants wish to stay in the home, the CARES Act allows for this, and we will need to work with them during this 120 period. For most of our rental property owners, this time will be business as usual, and renewing your lease with tenants in place will be a straight forward process. We encourage offering good tenants a standard lease extension agreement.
Situations That May Come Up
Standard Lease Extension Agreement
For good tenants who want to stay, this will be the simplest solution for most parties, assuming you are interested in re-leasing the home. Offering a standard 1-year lease extension will give all parties peace of mind during this time. Standard term lease agreements are also important if you are interested in potentially refinancing your home as excellent rates appear to be on the way. Questions on refinancing a rental property? Read our article on how to refinance a rental property.
Short term lease extensions
If for any reason you are not interested in continuing the lease in the future or if the tenants are unsure they want to continue leasing, but wish to stay, this can be a recommended option. Offering a three-month lease extension can be an easy way for all parties to feel secure moving through the next few months. Short term lease extensions are typically between three and six months. Our counsel is currently recommending against raising prices on short term contracts as it may be considered exploitation during the current pandemic.
Month to month lease option
This option is not recommended in most cases. Month to month rental agreements can lead to uncertainty for all parties and are harder to track for renewal or notice. Tenants are still required to provide notice to terminate month to month leases, but there are better options. Although we recommend against month to month leases, in some unique situations, they can be a good fit. Refer to your property manager for guidance if this is something you are considering.
Lease Renewal Process Summary
Top Properties has your best interests in mind during this process and will be working hard to provide the best service and best outcomes for you. Please fill out our renewal intent form below to help us understand what would be your best-case scenario as your rental property’s current lease comes to an end.
Once your form is complete, your property manager will reach out to you within the next week to clarify your intent and go over any specifics they may have for you prior to initiating negotiations with your tenants.