Convert a annual lease to month-to-month upon lease violation?

Question

With the nonstop eviction moratoriums, is it possible to write in a lease for an annual lease to convert to a month-to-month lease upon any lease violation? Making it easier to not renew and avoid the eviction moratorium?

Thoughts and legality to this is the tenant signs this agreement?

Colleen F. · Answer

@Paul Kuhn  I also like annual leases because there is an increased demand in the summer here. A month to month lease starting in May might result in me having only a summer tenant.  However with units opening up now I am considering month to month and then if we get out of this mess  offering an annual lease. One of the things I have thought about is how to offer this to the tenant.  One of the possibilities is to have a pre-screening question on proposed length of stay to screen out those who would only like to be here short term. You can also tell by job history etc.

I am not sure the legalities of lease conversion on violation. I think it would be tough to explain to a tenant and not really have the desired effect.  You are basically saying I will go month to month if there is a problem with you but they could interpret that you are a going to violate for any number of smaller lease issues.

Bill B. · Answer

I think you might as well just start at MTM then. You don’t want the tenant committing a lease violation on purpose to change the lease to MTM so they can move out early. If that’s too short I guess you could do y months then auto renew at MTM but you might get people only want to stay 6 months. Or a terrible tenant where 6 months seems like a year.

I just don’t see the violation part working since they commit the violation if they wanted to move out anyway.

Wesley W. · Answer

I agree with @Bill Brandt.

In this legislative climate I see absolutely no upside to a term lease.  I have offered MTM leases exclusively for 7 years.  The good tenants like the flexibility; the bad tenants push back and want a term.  It's a great screening tool. ;)

Scott M. · Answer

Way easier to make it month to month if that is your goal. If not, now you have to prove the lease was violated if the tenant provides any pushback at all and that is not always simple.  Point is, you may be in front of a judge either way (evict on a term or to prove they violated the lease) and depending on your city/state and judge you may find it difficult to prove the violation or the judge may see through your plan.

If you want month to month, just to month to month.

Colleen F. · Answer

@Paul Kuhn  I am thinking about M2M now given these eviction moratoriums. We will see how it goes when I advertise and offer my next unit for lease. People here are used to 9 month or 12 month leases.  If  this stops maybe in may I would put them on an annual lease.  I recently put my most difficult tenants on month to month and they are now paying back rent more aggressively.

It does look like VA puts it on you to take initiative on assistance. It doesn't say the tenant must co-operate or provide information. Does this not apply if you give them notice to terminate on a month 2 month?

Paul Kuhn · Answer

@Colleen F.

Thank you all for the replies. I wrote the tenant on a month-to-month lease due to the changing legalities in Virginia. I incentivized the tenant to stay long term, keeping rent increases to 2-5% for up to two years if they follow the entire lease to a T.

Apparently in Virginia it is becoming more difficult to evict. I will transition to a month-to-month lease from now on, with incentives for multi-year stays. Changes to law pasted below.

16.a. That upon enactment of this act and through June 30, 2022, no landlord shall terminate a residential tenancy, or take any action to obtain possession of a dwelling unit, for nonpayment of rent, if the eligible tenant has qualified for unemployment benefits or experienced a reduction in household income, incurred significant costs, or experienced other financial hardship during or due, directly or indirectly, to the coronavirus pandemic, except as follows:

1. If rent is unpaid when due, or if a payment under the terms of a payment plan is unpaid when due, the landlord shall, pursuant to § 55.1-1202, Code of Virginia, serve a written notice on the tenant that informs the tenant of the Virginia Rent Relief Program and provides the website address and statewide telephone number for that program. The written notice shall also provide information on how to reach 2-1-1 Virginia to determine whether there are any other available federal, state and local rent relief programs.

2. The written notice shall also inform the tenant that the owner, landlord, or owner's licensed agent shall apply for rental assistance on the tenant's behalf within 14 days of serving the notice on the tenant, unless the tenant pays in full, enters into a payment plan or informs the landlord that they have already applied for rental assistance. The landlord shall apply for rental assistance on behalf of the tenant no later than 14 days after serving the written notice on the tenant, unless they receive the full amount owed by the tenant or confirmation from the tenant that the tenant has applied for rental assistance before the 14th day, or they have entered into a payment plan with the tenant. If the tenant has applied for rental assistance, the landlord shall cooperate with the tenant's application, by providing all information and documentation required to complete the application, including but not limited to the W-9 form and any supporting affidavits. In an initial application, if the landlord or the tenant does not receive written approval from the Virginia Rent Relief Program or any other federal, state, or local rent relief program within forty-five days of when a completed application for assistance is made by the tenant or the landlord, the landlord may proceed to obtain possession of the premise as provided in § 55.1-1251. For any subsequent application, if the landlord or tenant does not receive written approval from the Virginia Rent Relief Program or any other federal, state, or local rent relief program within fourteen days of submission of the subsequent completed application, the landlord may proceed to obtain possession of the premises as provided in § 55.1-1251. If a tenant who has not paid in full or entered into a payment plan with the landlord within 14 days after the written notice is served refuses to apply for rental assistance and also refuses to cooperate with the landlord in providing information and documentation required to complete the application made by the landlord, or if such tenant is determined ineligible for rental assistance, or there are no longer funds available through the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136) and from the American Rescue Plan Act of 2021 (ARPA) (P.L. 117-2) for rental assistance through the Virginia Rent Relief program, the landlord may take action to obtain possession of the tenant's dwelling unit as provided in § 55.1-1251, Code of Virginia.

b. If a landlord reports to a consumer reporting agency or debt collector regarding a tenant who is participating in the repayment plan or receiving assistance from a federal, state, or local rent relief program, the landlord shall report the account as “current" in accordance with the Public Law 116-136: Coronavirus Aid, Relief, and Economic Security Act.

c. If a tenant is complying with a written payment plan with the landlord or has resolved any non-payment of rent, the landlord cannot take any action to obtain possession of a dwelling unit for non-payment of rent.

d. Nothing in this section relieves either the landlord or the tenant from their obligations to maintain the dwelling as those obligations are set forth in Article 2 and Article 3 of Chapter 12 of Title 55.1.

e. Nothing in this section shall void any judgment for possession validly obtained by a landlord prior to the effective date of this act; however, a landlord shall not initiate, maintain, or advance any legal process to obtain possession of a dwelling unit for non-payment of the rent unless the landlord complies with the provisions of this section.

f. Notwithstanding any other language to the contrary, should the Governor declare a state of emergency pursuant to § 44-146.17 of the Code of Virginia in response to a communicable disease of public health threat as defined in § 44-146.16 of the Code of Virginia, and if that declaration specifically provides that the eighth enactment of Chapter 552 of the Acts of Assembly Special Session I shall supersede the language set forth in enactment sixteen of this act then this sixteenth enactment shall not be effective so long as such a declared state of emergency remains in effect.

Scott M. · Answer

Not the only cost associated with a turn.  You have turn costs, holding costs as well etc.  Not trying to discourage you just throwing out some things in case you didn't factor them in.

Paul Kuhn · Answer

@Scott M.

Thanks for the replies, sucks in today’s legislative climate, though I wouldn’t even call it legislative, as it had no part in this.

I like the “guarantee” of the annual lease, not worrying about finding a new tenant. But as this property is self managed, I can change tenants without losing 1 month to finders fee.

Convert a annual lease to month-to-month upon lease violation?

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