When the existing lease is coming to an end, landlords can decide whether to allow a tenant to renew the agreement.
Many property owners decide to keep those tenants who pay on time, meet all their responsibilities, cause no trouble, and keep the rental unit in excellent condition.
Besides extending the lease term, a lease renewal may include some changes to the original agreement, such as an increase in rent or new rules.
However, even if they choose to continue a rental arrangement with the same tenant, landlords should consider creating a new lease contract and serve lessees with a lease renewal letter,
Through a lease renewal letter, landlords can communicate their plans to tenants, making sure both parties are aware of all the new terms, are well informed, and agree to the changes.
If you have a rental unit and want to keep quality tenants, you've come to the right place. We'll discuss the essentials of this document, how to write it, why it is important, how to find useful free templates, and more. Read on!
- Landlords aren't required to renew a lease (There may be some exceptions depending on each state's landlord-tenant laws)
- Property owners and managers often send the renewal letter to a tenant 90 days before the current lease agreement ends.
- Renewing the lease allows landlords to avoid the tedious process of finding a new tenant.
- A lease renewal letter details what a tenant must do to renew the existing lease.
- If the lessee agrees to continue the rental agreement after receiving the renewal notice, both parties should sign a new lease.
- A lease renewal notice letter is merely informational and doesn't bind both parties to a new lease agreement.
- When they don't want to renew a lease, property owners or managers must send tenants a non-renewal lease letter.
When Should Landlords Send a Renewal Letter to Tenants?
Ideally, landlords should send tenants a lease renewal letter with enough time. With this document, they know the lessee's decision and prevent their rental business from stopping if those who occupy the property plan to leave.
If they decide not to continue with the agreement, property owners must also notify lessees as soon as possible to make sure they have enough time to find a new tenant.
However, some states have set a timeframe indicating when landlords are required to send tenants a lease renewal letter.
The period depends on the lease term that both parties agreed to. If it was not addressed in the original contract, landlords must consider their states' laws.
In most states, the lease renewal notice period is 30-60 days. If landlords don't send the letter within that timeframe, the rental arrangement becomes a month-to-month lease as soon as the current lease expires.
Some states don't require property owners to send a letter within a specific period. However, doing so before the lease end date can bring several benefits, including the following:
- Tenants would have enough time to make a decision and inform landlords about it.
- Both parties could negotiate the new conditions or changes for a lease renewal agreement.
- Landlords would have time to screen potential tenants or advertise the rental property if current lessees decide not to renew the agreement.
What Should a Lease Renewal Letter Include?
Those who own or manage a rental property should be aware of their estate's requirements on lease renewals and the timeframe for sending letters or notices to make sure they comply with local laws.
Additionally, landlords must know what to include in these documents and be prepared to submit them before the original lease expires.
We'll share some templates at the end, but let's check what you should include in a lease renewal letter.
Details That a Lease Renewal Letter Should Include
- Landlords and tenant names
- Both parties' contact information
- Date when landlords send the letter
- Whether landlords want to renew the lease agreement or not
- Copy of the current lease agreement
- Property address and number
- Date tenants must pay the last payment
- Existing lease expiration date
- Deadline for tenants' response
- Property owners' signature
- Tenant's Acknowledgment
If landlords expect to renew the lease, this letter may also include the following information:
- New monthly payment
- New lease conditions, including terms, rates, and dates
- Changes to the original lease agreement
- Conditions added to the new lease agreement
- What the tenant must do if they want to renew the lease
The lease renewal letter must also include this additional information if landlords don't want to continue with the rental agreement:
- Date the tenant must vacate the rental property
- If landlords allow the original lease to expire and become a month-to-month rental agreement
- Explain what a month-to-month rental is, if applicable
- Reasons for not renewing the lease (It's mandatory only in some states)
How to Send a Letter to Renew a Lease Agreement
Property owners and managers can send a lease renewal letter by mail, email, or in person. However, they should always follow a few steps to ensure they have a receipt or other required documentation.
Sending the lease renewal letter by restricted certified mail is a good option, as it requires tenants to sign a receipt.
However, landlords can also deliver the letter in person and ask the tenants to sign a document indicating that they received the notice.
A lease renewal letter can also be sent with delivery and receipts to document that it has been delivered and received by the tenant.
In addition, property owners should keep a copy of the notice and a notation on the mean they used to send it.
What Should Landlords Consider Before Sending a Lease Renewal Letter?
Landlords must be sure they want to enter into a new rental lease agreement before submitting this document. Therefore, they must consider some key aspects.
Here are some questions that property owners and managers should answer to determine if a lease renewal agreement is a good option:
- Do you want to keep quality tenants? If the current lessees pay rent on time or keep the unit in good condition, a lease renewal could be a smart move.
- Is the original lease period expiring in 90 days? As mentioned, landlords should send a lease renewal letter before the timeframe expires. Therefore, checking local landlord-tenant laws is essential.
- Do you plan to change the rent price or some terms? A lease agreement renewal allows property owners to make some changes to the conditions set in the original contract.
- How long do you want to renew the rental agreement? Landlords can offer lease renewals for any timeframe, but it's common to do so for the same length.
- Would you agree to a month-to-month lease renewal? It's another way to keep good tenants if they don't want a new long-term lease.
- When do you expect to receive a response from the tenant? A lease renewal letter must also include when landlords expect a response from the tenants (deadline).
Renewing Lease Agreement Terms
Landlords who expect to alter some conditions in the rental agreement must also include that information in the letter.
Overall, property owners may consider the following changes for a lease renewal:
- Increase in the rent price to reflect the current market
- Rent price reduction to encourage good tenants to stay in the property
- Change to a month-to-month lease or if the landlord plans to sell the property
- Terms or potential solutions to issues that arose during the existing lease period
In other words, landlords can send a lease renewal letter to negotiate this:
- Rules or policies
- Rent price
- Security deposit
- Lease duration
- Renters insurance requirements
- Payment methods
Should Landlords Renew a Lease?
Property owners don't have to renew a lease. They have the right to decide if they want the existing tenant to stay on the property and come to a new agreement.
Some states have landlord-tenant laws that define some circumstances when property owners or managers cannot end an original rental agreement even if the lease term ends. However, they're limited.
In addition, ending a tenant's lease is considered part of the landlords' rights if they duly inform the tenants of their decision in accordance with state requirements.
If a landlord doesn't want to renew the lease after the rental period ends, they must send a written confirmation with some instructions that typically include the following:
- Return keys
- Clean all the appliances properly
- Remove personal items
- Remove trash
- Repair any damages that tenants or their guests may have caused to the property
- Suspend cable and phone services
Final Thoughts: Do You Want Keep Good Tenants in Your Rental Property?
Whether you want to keep quality tenants in your rental unit or plan to notify them that you don't agree with a new lease, sending this letter is essential.
Depending on the state where you live, it could also be mandatory. Therefore, besides understanding the local landlord-tenant laws, you should know how to write a lease renewal letter and all the details you should include.
Fortunately, Doorloop can give you a hand! We have the sample lease renewal letter you need to send this essential document to your tenants before the lease ends.
In addition, we offer many more helpful resources for landlords and property managers, including residential and commercial lease and sublease agreements, rental application and security deposit forms, eviction notices, lease termination letters, and more!
To download our lease renewal template, click here!
And if you'd like to learn more about the post-lease journey, give this article a read!
Frequently Asked Questions
What Happens If I Don't Send The Lease Renewal Letter Before The Lease End Date?
As mentioned, landlords must send lease renewal letters before the lease end date according to the state's requirements.
If they fail to do that, the current lease becomes a month-to-month rental. In simple terms, tenants will pay rent monthly until one party decides to end the lease.
Should I Explain Why I Don't Want to Renew a Rental Agreement?
It depends on your state's laws. In most cases, landlords aren't required to explain why they don't want to renew a lease.
However, in California, property owners must give cause or reason for terminating the agreement.
Why Should I Consider a Lease Renewal?
Rental agreements usually have a fixed term. Therefore, you cannot alter the dates or conditions.
If you want to increase or reduce the price, make some changes, or extend the lease period, you must draft and sign a new contract.
What Is the Difference Between a Lease Renewal and a Lease Extension?
A lease renewal allows tenants and landlords to continue with a rental agreement through a new contract.
This document can include the same conditions set in the original contract or some changes to the lease arrangement as long as both parties agree.
However, a lease extension is when landlords agreed to extend the rental agreement to cover an extra period only.
This process is often done through an addendum that both parties sign. Unlike lease renewal, in this case, the original terms always apply.
In addition, the lease extension generally occurs when the tenancy continues after the original term ends.
Can the Current Tenant Stay in the Property Without a Lease Renewal?
Yes, they can! A tenant can stay in your property even if you don't serve them with a lease renewal letter.
In most states, expired lease agreements become month-to-month tenancies with the same terms both parties agreed to when signing the original lease.