If you’ve got a great tenant, you probably want to renew their lease for another year. According to data from the Rental Housing Journal, two-thirds of all renters renewed their leases in 2022.
As a landlord in the Memphis, TN area, it’s important to know how to create an effective lease renewal agreement.
Read on to discover some helpful lease agreement tips and information about how you can move forward with a tenant lease renewal for a smooth, stress-free process.
Notify Tenants in Advance
Before you even offer your tenants a lease renewal agreement, it’s important to let them know that their current lease is ending. Notifying tenants in advance gives them ample opportunity to plan and decide whether or not they want to renew their lease.
Ideally, you should send a lease renewal notice to tenants within 30 to 45 days of their current lease’s end date. This should give them plenty of time to decide whether they plan to stay, and if they prefer to do so with a renewed lease for another year rather than going month-to-month.
In the meantime, go over the current lease terms carefully. Now is the time to make any changes or discuss issues with your tenants before you submit a new lease for them to sign.
As a landlord, renewing a lease gives you the chance to update terms or make changes that you feel would be beneficial. It also gives you a chance to decide whether or not you plan to raise the rent or keep it at the same rate.
Lease Renewal Agreement Template
While the terms of your tenant lease renewal may vary from other landlords, there are some things you should always include. Here is the basic outline for a lease agreement template:
- All parties involved
- Details about the property
- The lease extension term
- Rent adjustments (if applicable)
- Maintenance responsibilities
We will go over each of these in more detail below. Understanding these line items will help to ensure that your lease renewal agreement is easy for all parties to understand and agree to.
Parties Involved
This section is pretty self-explanatory. You’ll need to include the full name or names of all of your tenants along with the property address. Include contact information in the renewal agreement so that you can get in touch with your tenants later if you need to.
Property Details
The tenant lease renewal should include a detailed description of the property that includes the complete street address and unit number if it applies. If there’s any other information that uniquely identifies your property, include that as well.
Lease Extension Terms
This part of a tenant lease extension agreement is crucial. Make sure you include the specific period or length of time that the lease will be extended. In most cases, this is usually for one more year, but that may vary based on whatever terms you and your tenant agree on.
Rent Adjustments
Not all landlords choose to raise their rent when extending a lease. Either way, you should be very clear about what the rent will be once the lease is extended.
Be very specific about when your monthly rental rates will change by including the exact date that they become effective. This section also provides you with an opportunity to include information about rent collection methods and penalties or late fees.
Maintenance Responsibilities
There is a good chance you won’t change anything about maintenance in your lease renewal terms. However, there might be an instance when you want to update what your tenant’s responsibilities are for any repairs, upkeep, or maintenance on the property. Remember to be as specific as possible here so that there’s no confusion about where your responsibilities end and where your tenant’s responsibilities begin.
Executing the Agreement
After you’ve decided that you want to renew a lease with a tenant, it’s a good idea to seek legal advice before making the offer. Doing this allows you the chance to ensure that you’re doing everything according to current Tennessee law. You can also talk to your rental property management company if you use one.
The lease renewal gives you a chance to make changes or add addendums. You may decide to change terms like updating rules about pets, changing the late rent payment fee, or updating the wording in your lease regarding things like noise or property upkeep.
Once you’ve drafted the agreement and given your tenant proper notice, you’ll need to wait until they agree to the renewal. Keep in mind that they may want to negotiate some of the terms with you, such as any changes in rent or maintenance responsibilities.
After all parties agree on the renewed lease terms, everyone should sign it. Once the new lease has been signed, make at least one copy and give it to the tenant so they have it for their files. As soon as the lease renewal is signed by all parties, it is a legally binding contract.
Benefits of a Lease Renewal Agreement
Having your tenant sign a lease renewal agreement comes with many benefits. First, you’ll reduce or eliminate turnover costs like paying for cleaning and marketing the property to a new tenant.
A lease renewal also helps you hold on to the good tenants who are friendly, take care of the property, and pay their rent on time. It also ensures that you’ll receive consistent rent collection for another year (in most cases).
These agreements allow you to increase the rent, which is entirely up to you. It may also save you on renovation costs since the tenant will continue to live there for another year.
Consider a Tenant Lease Renewal
If you want to retain great tenants and reduce costs, executing a lease renewal agreement is a great option. Consider the tips from our guide to help you create the ideal agreement for your Memphis, TN property.
Reedy & Company is one of Memphis’s leading property management companies. If you want a property management company that has managed over 3,500 properties and counting, contact us today!
