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How to Properly Handle Tenant Lease Renewals Featured Image

How to Properly Handle Tenant Lease Renewals


Handling lease renewals is an important aspect of property management, whether you’re a landlord or a property manager. Here are some steps to help you navigate the lease renewal process:

  1. Early Communication:
    • Initiate communication well in advance of the lease expiration date. This gives both parties ample time to discuss and negotiate terms. You want your residents to know what to expect and notifying them early will help them with their planning.
  2. Deciding to Renew or Not
    • A landlord is not obligated to renew a lease to a tenant nor is a tenant entitled to receive a renewal. If you plan to send a non-renewal make sure to check the lease and any local regulations that may require additional forms and steps to be taken. Sending this early can also help the tenant plan for their move.
  3. Assess Current Market Conditions:
    • Research the current rental market to ensure your proposed rent increase or renewal terms align with the current rates in your area.
  4. Review Lease Agreement:
    • Thoroughly review the existing lease agreement to understand its terms, conditions, and any clauses related to renewal. Most leases have a clause when renewals can be sent, make sure yours is at least 180 days in advance to reduce vacancy loss and allow both parties enough time for future plans.
  5. Evaluate Tenant Performance:
    • Assess the tenant’s payment history, property care, and compliance with lease terms as well as the way they interact and communicate about issues. This evaluation can help you decide whether to renew the lease or make adjustments to the terms.
  6. Consider Property Expenses:
    • Each year property and ownernership expenses increase. Rent increases should cover expense increases such as maintenance repairs, real estate taxes and other local property-related taxes, insurance, utilities, tax returns, and more when factoring in the renewal rent.
  7. Determine Renewal Terms:
    • Decide on the renewal terms, including the duration of the new lease, any changes to rent, and any other modifications to the lease agreement.
  8. Communicate Proposed Changes:
    • Clearly communicate any proposed changes in terms, including rent increases or modifications to the lease agreement, to the tenant. Provide a written notice outlining the proposed terms. Do this by sending the renewal offer and the renewal lease at the same time.
  9. Negotiate if Necessary:
    • Be open to negotiation. If the tenant has concerns or requests changes to the proposed terms, be willing to discuss and if it doesn’t work out then be prepared for the tenant to move out.
  10. Execute Renewal Agreement:
    • Both parties should sign the renewal agreement to make it legally binding. Ensure that all necessary parties have a copy of the signed agreement. Have this done within two weeks of sending the initial lease renewal agreement
  11. Plan for the Future:
    • Use the renewal process to plan for the future. Consider whether there are improvements or changes that can be made to enhance the landlord-tenant relationship and property management processes.

Maintaining open and transparent communication with your tenants is key to a successful lease renewal process. Completing your lease renewal season early allows the landlord to rest easy when a tenant decides to renew and allows a tenant to rest easy knowing their home is secure for another year. On the other hand, if the tenant does not want to renew – it gives the landlord time to find new tenants, and also gives the tenant time to find a new place if a renewal option isn’t offered.

Reach out to MerGo today to see how we can help you with your renewal process and make it easier on you.