Landlords Preparing To Move Tenants Out.
Moving Tenants Out
In previous articles we have discussed the topics of moving tenants in and what should be done in preparation for an ending tenancy. In this article we will discuss some of the issues related to moving tenants out.
As is true when moving tenants in and during the period of their occupancy, a good ending also requires that the rights and obligations of both parties are understood and observed when the tenant leaves. Moving tenants out can potentially be more complicated and troublesome than moving them in because of the fact the tenants have possession of the property at the end of tenancy and more rights than when they were the selected applicants but had not yet been given possession of the rental unit.
Regaining Possession
The issue of when the landlord has regained possession of a rental unit can have significant legal implications. Entering the unit without proper notice before the tenant intended to terminate occupancy can lead to claims against the landlord including theft of the tenant’s property.
Even if the tenant was occupying the unit beyond the expiration of the lease term stated in the lease agreement, the tenant may be intending to ”hold over” for a period due to unexpected issues including events beyond control of the tenant – for example, related to delayed availability of the tenant’s next rental home. An eviction can be necessary if the tenant fails to leave as scheduled. Detailed discussions of eviction can be found in our course “9 Steps to Eviction.”
Including move-out procedures within the lease agreement can greatly reduce uncertainty and problems related to the tenant’s right to possession.
There are things a landlord should do and can do to make things go more smoothly when tenants move out. There are important legal issues that must be considered when a tenancy is terminated including what notification should be given, legal options if tenant doesn’t leave upon expiration of a fixed-term lease or after giving or receiving a termination notice and what happens if the tenant leaves without giving required notice. This article will only address some of the issues associated with (1) reaching the end of a fixed-term lease or (2) a month-to-month rental agreement being terminated.
The keys to minimizing the hassle related to moving tenants out are (1) the degree of preparation and detail that went into moving the tenant in – discussed in our previous article titled “Moving People In”- and (2) following proper procedures prior to the move-out date – discussed in our previous article titled “Preparing For a Vacancy.” Just as an investor purchases an investment property with an exit strategy in place, the smart landlord places his tenant in the rental unit with clear, agreed-to, and documented move-out procedures.
Move-Out Procedures
Possession is often returned to the landlord by the tenant simply leaving the keys on the counter without having communicated in any way beyond a phoned-in message that the tenant was giving notice of termination or in conformance with the lease agreement without any specific notice. However, a more formal way of transferring possession, though requiring more time for both landlord and tenant, has significant advantages in reducing risks of problems between parties.
A good procedure is to:
- Meet the tenants, preferably all those who executed the lease agreement, at the property for a final walk-thru inspection, preferably with water and electric services still on.
- Complete the move-out checklist & inventory of appliances and any other furnishings (discussed below) with signatures of all parties.
- Ask if there are any unreported maintenance problems that weren’t previously discussed during the inspection.
- If there are items of personal property that are purposely being left by the tenants, have them sign a statement that they relinquish ownership of the property and the landlord may dispose of the items as desired, with any costs of disposal (including labor, transportation, and fees) being deducted from the security deposit. A future article will discuss the subject of abandoned tenant property.
- Get the keys and any garage door remotes back from the tenants.
It is best that your desired procedure is required by clauses in the lease agreement, as this puts the landlord in a better legal position if the failure of the tenants to follow the procedure results in disputes.
Move-In/Out Checklists
Although this is an article about moving out, we will discuss both move-in and move-out checklists because they are interrelated. Many state laws require a move-in checklist to be completed when possession is given to the new tenants. The checklist is a written statement of condition of the rental unit at the time of move-in signed by the landlord and the tenants, preferably all who signed or will sign the lease agreement. The move-in inspection should be done before the tenant(s) moves in any of his boxes or furnishings so that defects are not hidden by those items. Some states also require that tenants have the right to be present during a final walk thru inspection, possibly with various specific requirements regarding notification and scheduling of the inspection. Failure to follow the law related to the move-out inspection could result in the landlord losing his right to deduct from the deposit.
The original signed move-in checklist should be retained by the landlord in the tenant’s file and a copy given to the tenant(s). The same checklist, or a copy thereof, should be used to document the condition of the rental unit upon the tenant’s move-out and helps serve as evidence why deductions were taken from the security deposit.
If the landlord prepares such a move-in checklist without the assistance of the new tenants, the tenant in those states where the checklist is mandated, has the right to inspect the premises himself to verify the landlord’s accuracy and detail in completing the checklist. If there is no law on this subject, the lease agreement should contain a clause requiring that the tenants report any discrepancies within a specified few days of possession.
Free-standing appliances and any other property not physically attached to the real estate should be listed on the checklist or on a separate inventory list. Any other furnishings provided by the landlord (e.g. shower curtain, welcome mat, window coverings) should be inspected and their existence and condition noted.
Failure to follow good procedures can have important implications regarding the landlord’s right to withhold any part of the security deposit when the tenant moves out. Landlords should be sure that good checklists are utilized whether or not required by law in their state. It is better to have more detail than needed rather than not enough. Other than the fact that the more information included, the longer it takes to complete the sheet, one cannot really include too much information on the sheet.
There is no set format for checklists except for issues that might be required by the laws of a few states. Formats in use vary from a single page to multi-page documents having a separate page that covers each room or other area in detail. This writer highly recommends the latter approach, as the more detail in the checklist, the fewer the potential for disputes. Without significant detail it can be impossible for the landlord and departing tenants – and potentially a judge – to agree on the difference between move-in and move-out conditions. Deductions from deposits or claims of damages that are disputed by the tenant must be adequately covered in the move-in/move-out checklists.
Whichever format you decide to use, it is recommended that the list include at least the following:
- Appliances & furniture – cleanliness, with notes of any damage
- Cabinets – cleanliness, with notes of any damage
- Paint – cleanliness, with notes of any damage including that due to tobacco and cooking smoke
- Carpets & other floor coverings – condition, with detailed description of any stains, tears, excessive wear, or other damage
- Closets – cleanliness, with notes of any damage
- Windows – cleanliness and no cracks (fix any before marketing)
- Window coverings – cleanliness, with notes of any damage
- Window screens – cleanliness, with notes of any damage
- Doors – cleanliness and operation, with notes of any damage
- Sinks, showers, tubs, toilets – cleanliness, leaks, operation
- Light fixtures – cleanliness, with notes of any damage
- Landscaping, if tenant responsibility – condition, with notes of any damage
- Parking areas and garage floor – clean and oil free
Upon completion of both move-in and move-out inspections all tenants should be required to sign the last page of the inspection checklist and to initial each other page of a multiple-page checklist.
It is recommended that the condition at move-in and again at move-out be well documented with photos and that the tenant(s) know of the documentation. It can be helpful to take some photos during the walk-thru and to include the new tenant(s) in some of the photos to avoid future claims that he was not aware of the condition of the unit at one of the inspections and to make the tenant expect that there will be equally extensive documentation of the condition of the property following move-out.
Check with the HOA
As has been discussed in previous related articles, if the property has a Home Owner Association (HOA), the lease agreement should have had clauses related to it, including that the tenant reviewed HOA documentation prior to signing the agreement that the tenant accepts responsibility for any penalties resulting from his violation of Bylaws and of Rules & Regulations. A landlord should check with the HOA near the end of the tenancy regarding any possible violations for which the landlord has not yet received notice.
Utilities
Even though the tenant will be responsible for starting certain utility services, paying those bills during tenancy, and terminating services upon vacating, some states have statutes that allow certain utility providers to collect from the property owner, refuse to turn on service for the owner or a new tenant, and/or lien the property if the tenants did not pay the bills. This is more likely to be so for services that are provided by the city or a related government entity and is most often so for water services. For properties in such locations, it may be possible to gain some protection from finding out that the tenant left without paying the current month’s bill, perhaps even being delinquent a month or more. It will be more difficult if the tenant has left the area without providing a forwarding address.
Unfortunately, it may be difficult to obtain account status from the utility service because the account is that of the tenant.
Summary
Utilizing good procedures when moving tenants in and out can minimize arguments about deductions being made from the security deposit.