When a written lease for a specified term expires, the default rule is that the tenant is required to move out and may be evicted as a holdover tenant if they fail to do so. If the tenant continues to pay rent to the landlord and the landlord continues to accept it, the terms of the written lease remain in effect until the tenant moves out. However, the lease does automatically not renew for the same duration as the original lease without the landlord and tenant executing a document in writing agreeing to this. Instead, the lease becomes a month to month lease, regardless of what the original term of the lease was.
Navigating Post-Lease Expiration: Tenant Occupancy Duration
The terms of a lease agreement govern the relationship between the landlord and tenant. Typically, the lease specifies a fixed term, during which the tenant has the right to occupy the residential property in exchange for rent payments. But what happens when the lease expires and the tenant stays?
Defining Holdover Tenancy
A holdover tenancy, a term as fascinating as it sounds, is a legal phenomenon that arises when holdover tenants remain in the property and continue to pay rent after the lease has expired, with the landlord’s consent. It’s a bit like an unexpected guest who decides to extend their tenant's stay a little longer, and the host, the landlord in this case, allows them to do so.
Nevertheless, this friendly prolonged stay might strain the landlord-tenant relationship, potentially causing legal disputes and misunderstandings. If the landlord accepts rent payments without establishing a new long-term lease, a holdover tenancy can transition into a month-to-month rental agreement. This is a delicate situation requiring careful maneuvering to prevent landing in nebulous legal territory.
The Implications of Accepting Rent Payments
When a landlord accepts rent payments after the lease has expired, they might unwittingly be setting themselves up for a potential legal roller coaster ride. By choosing to accept rent, this act could be construed as consenting to a new lease or rental agreement, potentially converting the lease to a month-to-month arrangement, even if unintentional. To avoid such complications, it’s crucial for landlords to have a clear understanding of how to accept rent payments in a legally compliant manner.
Notably, agreeing to rent payment post-lease expiration may pave the way for a holdover tenancy, which could muddle eviction proceedings as the tenant might gain the right to continue occupying the premises. It’s comparable to unleashing unexpected legal complications, much like opening Pandora’s box.
Transitioning to Month-to-Month Tenancy
If the tenant continues to pay rent to the landlord and the landlord continues to accept it, the terms of the written lease remain in effect until the tenant moves out. However, the lease does not automatically renew for the same duration as the original lease without the landlord and tenant executing a document in writing agreeing to this. Instead, the lease becomes a month-to-month lease, regardless of the lease's original term.
The transition to a month-to-month lease can carry both advantages and disadvantages for landlords. On one hand, it allows for the flexibility to charge higher rent and retain quality tenants with flexible end dates. On the other, it presents a risk of reduced financial security due to the potential quick turnover of tenants.
Each party must give the other 30 days’ notice before terminating it. If the tenant wants to move out, he or she is required to inform the landlord 30 days in advance. On the flip side, the landlord must give the tenant 30 days’ notice before filing a petition for eviction. For more on evicting a tenant on a month-to-month lease, check out: Can You Evict Someone if There is No Lease?
Tenant Security Deposit and Lease Closure
Closing a lease entails more than just returning the keys and saying goodbye. It also incorporates the refund of the tenant’s security deposit. Landlords are required to refund any unused portion of the security deposit and furnish an itemized statement within the legal timeframe, usually within 21 days following the tenant’s departure from the property.
Landlords are also required to provide an itemized list of deductions for any unpaid rent or damages. The itemized statement should be delivered within 14 days of completing the work, or a good faith estimate should be provided if the work cannot be completed within 21 days. Failure to return security deposits properly can lead to penalties such as forfeiture of the deposit or imposition of fines.
A reader asked the following question, which inspired this article:
Question: My roommate and I are in Chicago and we were on a lease from November 2017-December 2018 and texted our landlord about resigning the lease, but she never showed up. However, we have been paying rent up until now. We notified her at the end of July we were planning on moving out on September 1st. She initially said we were on a lease, so we could not, but when we explained that we were never on a lease because she never came back to provide us with one, she then said our lease automatically renewed even though we never discussed this and was never on our initial lease. Does she metaphorically have a leg to stand on? What exactly are our options? Any clarification on this would be greatly appreciated.
Answer: Your landlord does not have a leg to stand on. Once your lease expired, it did not automatically renew. If you have not already, you should provide your landlord with a written 30 days notice of your intention to move out. Once the 30 days have expired, you are free to move out.
Frequently Asked Questions
What happens when your lease runs out?
When your lease runs out, unless you or your landlord takes specific steps to end the agreement, it will simply continue on the same terms. You don't need to do anything unless you receive notice from your landlord.
What is are a landlord's options when a tenant holds over after a lease expiration date?
The options for a landlord when a tenant holds over after a lease expiration date include allowing the tenant to remain on a month-to-month lease, negotiating a new lease, or understanding the possibility of having forgotten about the expired lease. It's essential for the landlord to take appropriate action to address the situation.
Do leases automatically renew in Illinois?
Yes, leases can automatically renew in Illinois. It is important to review the terms of the lease agreement to understand the renewal process.
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