Following the end of your lease, your tenant may ask you if they can rent the property again. However, the agreement they want to strike this time is an estate at will.
Due to your familiarity with your tenant, you may accept the offer without much thought. Of course, knowing what you are getting into before finalizing any agreement would be ideal.
Let’s take this opportunity to learn more about the estate at will arrangement. We will discuss how it works, its pros and cons, and other relevant matters. Continue reading before you decide on your landlord’s lease offer.
Understanding Estate at Will Arrangements
An estate at will is known by a few different names. You may also hear it referred to as tenancy at will or a lease at will.
The most important thing to know about a lease at will is its duration. Or rather, you should know that it has no defined duration. The lease can run for an indefinite period. Your arrangement may last for a month or go on for years.
Another key feature of the tenancy at will arrangement is how it allocates power. In most landlord-tenant arrangements, the terms of the lease determine who has authority in a given situation. That is not the case with tenancy at will agreements.
If a landlord tells a tenant to move out, they must abide. On the flip side, a landlord cannot make a tenant stay in their apartment if they want to leave.
Payment options are also more flexible with lease at will arrangements. You and your tenant may decide on a specific number initially. A month later, you may talk again and change the payment terms. In some cases, the tenant may even render a service instead of providing monetary compensation to their landlord.
One more thing we want to highlight about estate at will agreements is the lack of a formal contract. As you can imagine, the absence of a formal contract can make things interesting if disagreements emerge.
What Are the Limitations of an Estate at Will Arrangement?
Although estate at will agreements provide plenty of freedom for the tenant and landlord, they still have certain limitations. Let’s discuss those limitations in this section of the article.
The Landlord Must Offer 30-Day Notice before Evicting Their Tenant
As noted in the section above, estate at will arrangements do not have defined durations. Either you or your tenant can end the agreement whenever you please. That said, a landlord cannot tell their tenant to leave and expect them to do so within the day. New York State protects tenants from that predicament.
According to New York State law, a landlord can only terminate an estate at will living arrangement if they serve a written notice to the tenant at least 30 days before requiring them to leave. They must serve the written notice directly to the tenant or another person in the rental property of “suitable age and discretion.” If they cannot find the tenant or someone who fits the description, the landlord can place the written notice on a conspicuous part of the property.
Thanks to that New York State law, a tenant will have time to find a new home even if their landlord wants them out. A tenant cannot be forced to leave until the 30 days are up.
When the 30 days are up, the landlord does not have to wait for the tenant to move out voluntarily. They can enter the property and take action to reclaim it.
Formal Leases Supersede Estate at Will Arrangements
Estate at will agreements are also limited in terms of their effectiveness.
Let’s say you and your tenant agreed to an estate at will arrangement because you were both busy and had no time to hammer out a formal lease. The both of you decided to carry on the terms of your old lease without making things official.
Now that you both have time to negotiate, you decide to discuss a new lease in great detail. You have decided on new rent charges, the length of your lease, and other essential terms.
As soon as you finalize that new lease, it will automatically supersede your estate at will arrangement. Be ready for that because there may be terms in the new lease that will force you to make changes. Get everything in order before finalizing the lease to avoid any issues.
Standard Protections for Tenant and Landlord Still Apply
The absence of a formal lease does not allow the tenant or landlord to do what they want.
For instance, tenants can still be held responsible if their recklessness or negligence led to the rental property sustaining damage. The landlord does not need a lease to hold you accountable for that behavior.
Consult with a real estate lawyer and decide on the action you want to take in that scenario.
Meanwhile, the landlord can only enter the rental property after offering proper notice beforehand. They are also still required to maintain the rental property. If your landlord stops maintaining the rental property now that you have switched to a tenancy at will arrangement, you can also take legal action against them.
What Are the Advantages of Estate at Will Arrangements?
Is an estate of will arrangement right for you? If you are having a tough time deciding if you want to present this offer to a tenant, you should consider the advantages and disadvantages of such a proposal. We will start by discussing the advantages in this section of the article.
You Can Make Money on Short-Term Arrangements
Your tenant’s lease recently ended, and they are not planning to renew it because they are moving soon. However, they cannot move yet because they are still finishing up a project at work. Because their lease has ended, they may look to stay in a hotel until they get everything in order.
Before your tenant leaves, ask if they want to negotiate a tenancy at will deal. You will allow them to stay in your rental property as long as they pay you an agreed-upon sum.
This type of deal makes sense if the tenant has been a model resident. They may welcome the estate at will arrangement because it helps them out of a tough spot. Getting some extra income from that deal is a good outcome too.
You Can Still Profit before a Sale Is Finalized
According to Investopedia, a landlord’s responsibilities include administering prompt repairs, following building codes, and maintaining vital services such as electricity, heat, and plumbing. Now that you are getting up in their years, you may no longer want to deal with the responsibilities of being a landlord.
That is why you have decided to sell your rental property.
Selling your rental property can net you a tidy sum that will serve you in retirement. Unfortunately, transactions like that are rarely completed quickly. Because the sale is taking so long, you may lose money. In addition, no tenants may be signing leases because they do not know what policies the new landlord will enact.
Going without profit for that long will not benefit your financial health. To get around that problem, you can arrange estate at will arrangements with your tenants.
Tell them what is happening with the sale and ask them if they are still okay with temporarily moving into your rental units. You may be surprised to see how many tenants are open to these arrangements. Take care of a few more tenants via tenancy at will arrangements before you enter retirement.
You Can Welcome New Tenants Quickly
Ordinarily, simultaneously processing paperwork for a bunch of tenants is a nightmare scenario. However, that does not need to be the case if the tenants have agreed to lease at will arrangements.
Since no contracts exist for these agreements, you can quickly welcome the tenants onto your property. That is a huge plus if you need to start making money as soon as possible.
You Can Get Rid of a Problematic Tenant Immediately
Tenants can be problematic for different reasons. First, they can be problematic because they engage in criminal behavior inside your rental property. Some tenants may also cause problems for their neighbors by playing loud music or littering. You may also have issues with tenants because they are constantly behind on their payments.
A lease agreement may give you enough leeway to eliminate tenants exhibiting those problematic behaviors. However, you will likely go through a lengthy process before you can get them removed unless law enforcement gets involved.
The eviction process will go faster if you and your nuisance tenant only have an estate at will arrangement in place. Serve them the written notice that you want them out, and they must leave in 30 days.
You Can Accommodate a New Tenant Faster
An individual who found your rental property online may have fallen in love with it right away. As a result, they may offer you a better deal than anything you have with your temporary tenants.
If you had formal leases, you might not have had the room to accommodate your new tenant. Because you have some temporary arrangements, you can inform them about the new tenant and state your plan to welcome them.
At that point, your old tenant may decide to move out. They may also be open to negotiating a lease that is favorable to you if they have enjoyed your rental property. Whether you are welcoming a new tenant or creating a lease with an existing tenant, the result will be better for you.
You Can See How a New Tenant Will Behave
Finally, you should consider offering lease at will arrangements to new tenants because it can grant insight into how they will behave as tenants. Use the temporary agreements to determine if you want to offer your new tenants long-term leases.
What Are the Disadvantages of Estate at Will Arrangements?
We are done highlighting the advantages of estate at will arrangements for landlords. For this next section, we will focus on the disadvantages of striking that deal.
You May Have a Hard Time Finding a Replacement Tenant
A flexible arrangement with your tenant can be an advantage in a robust rental market. But, of course, that kind of market does not always exist. Sometimes, tenants may be hard to come by because they prefer other living arrangements.
After your temporary tenant decides to leave, you may struggle to find a replacement. You also cannot enlist the help of your tenant to find their replacement because there is no lease in place. As a result, the rental property may stay vacant for a while because tenants are unavailable.
You May Only Get Offers from Temporary Tenants
Now that you have offered one tenant an estate at will arrangement, your future tenants may want the same thing. They may want to avoid a long-term rental commitment. If you will only rent them a property if they sign a lease, they may decide to take their business elsewhere.
Estate at will arrangements are fairly common, but not all landlords offer them. You must decide if you want to offer that arrangement even if it leads to fewer long-term tenants.
You May Have Difficulty Holding a Negligent Tenant Accountable for Their Actions
Entering a rental agreement with no lease is risky for any landlord. As much as possible, you should only present that offer to tenants you have a history with. That way, you can be confident that they will be responsible.
It is hard to tell what could happen if you rent out a property to an unknown tenant. They may do all kinds of damage to your property. You may have to pay for expensive repairs to prepare the property for a new tenant.
Holding the reckless tenant responsible for what they did can be a trickier ordeal with no lease agreement. The good news is you can still enlist the assistance of a legal expert. Hire an experienced lawyer if you want to recoup compensation in that situation.
An estate of will arrangement can be beneficial for both landlords and tenants. There is an element of risk involved, but you can mitigate that with careful planning. Working with a good lawyer can also minimize the risk if you offer an estate of will living arrangement.
Contact us at the Alber Law Group, and we will shield you from any false claims put forth by your former tenant.