A fist bump isn’t a legally binding contract. If you have a tenant living in your rental without a lease they’re essentially on a month-to-month lease.
In this post, we address how to handle this situation and also if you can legally raise rent on this tenant.
Our friends over at Avvo discuss this in their webinar with Zillow addressing how to handle a current tenant without a lease.
The audio file above addresses this question as Avvo’s chief legal officer, Josh King, weighs in with his thoughts.
Below you can read the transcript of the conversation:
Legal Disclaimer: The materials and information presented here were provided for informational purposes only and not for the purpose of providing legal advice. Zillow Group does not make any guarantees as to the sufficiency of the information included or its compliance with applicable laws. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed in the audio and from the webinar are the opinions of Avvo and may not reflect the opinions of Zillow Group.
Transcription of the audio file above
What happens if you don’t have a lease
Interviewer: I don’t have a lease with my current tenant who has been living in the residence for nine months. Can I sign a lease with my tenant and increase rent at the same time?
Josh: Yes. It’s not always a great idea to have people leasing space from you without an agreement, but I know it happens, too. I mean, it can happen in roommate situations, maybe if you wanna make something more formal, or in, you know, places where you have a mother-in-law unit or the like.
Essentially, if you have someone living there without a lease, they are effectively on a month-to-month lease. So you can certainly… And if you find yourself in that situation, I would certainly encourage this, you can certainly go to them and say, “Hey, you know, I think it’s time to formalize our relationship, and I’d like you to sign this lease.” And that lease will have, obviously, a lot more terms in it than your verbal month-to-month lease you’ve got, and it may include increasing the rent, but, I mean, fundamentally, it’s the same as any month-to-month lease.
You can go in and ask them to agree to new terms, you can ask them to agree to new rent, but that’s also one of those situations where that’s gonna be a much more productive discussion and one that’s gonna be taken a lot better if you do that in person, rather than just sending them some sort of coldly, informal communication out of the blue. Then, you can certainly have the cold and formal lease, I would certainly encourage you to have that, but it’s a completely different ballgame if you communicate that to them by having an in-person meeting, handing it to them, offering to talk through it, explain why you think it’s important to have something that’s actually documented. And it may even be more protective for them because you may want to give them a three-month lease, a six-month lease, or a one-year lease, something that may even give them a little bit more comfort there. But, it’s absolutely something you can and certainly should do in a situation like that.
Our thoughts at RentPrep :
You need to assess the relationship with your current tenant. If they’re a good tenant you should consider getting them to sign a lease.
Even if you don’t have any problems currently, the lease will help clarify unforeseen future issues.
A rental lease form is included for free in our landlord starter kit.
If your tenant has been a headache you may want to consider moving onto a new tenant. Handle the termination of the tenancy as if it were a Month to Month lease.
I don’t have a lease what are my rights?
In this situation, the tenancy is treated as a month-to-month tenancy. In this instance, the landlord can simply not renew the lease for the next month and the tenant doesn’t have any rights beyond that month since their lease expired.