Don’t Let Tenants In Before the Official Move-In Date
FOR REALTORS/LANDLORDS: May 2023 Substack Exclusive
By Eric Lyerly, Go4Rent Guest Writer
All landlords want to start off on the right foot with their tenants. A good landlord-tenant relationship can make property management easier. However, when landlords make concessions early on, this can create more problems than resolutions. For example, a landlord may allow tenants to move into a property before a lease begins. In this scenario, the landlord will typically prorate the rent to account for the early move-in.
However, there are circumstances where an early move-in can create legal or insurance headaches for landlords—especially if the lease agreement has yet to be signed. Landlords should never let renters move in pursuant to finalizing this agreement. Here are five reasons why.
Insurance Issues
Landlords purchase rental property insurance to protect against risks associated with renting one’s property. These policies typically offer coverage for property damage, injury liability and loss of rental income. Landlords may purchase additional riders for flood insurance, guaranteed income insurance, emergency coverage and potential vandalism from third parties.
However, if a renter moves into a property before signing a lease and damages the residence, landlords may have difficulty filing a successful property damage claim. Likewise, the insurance company may challenge any liability claims arising from an injury to the renter on the same property. The insurance company will question the existence of a landlord-tenant relationship. Alternatively, insurers can challenge whether the renters were actually guests or argue the risk of loss is on the landlord in the absence of a signed lease.
Landlords should remember that insurance companies are businesses. Claims affect their profits. Therefore, landlords shouldn’t give their insurance company ammunition to deny a property damage or liability claim.
Intentional Damage to the Property
Speaking of landlord insurance, basic policies typically do not provide coverage when tenants cause damage to a property intentionally. They also do not cover theft and vandalism by the tenant.
Suppose a landlord allows a tenant to move in pursuant to a verbal agreement and that tenant purposely damages or vandalizes the property. The landlord’s insurance company will likely not cover the damage. Rather, the landlord’s typical recourse in this situation is to deduct repair costs from the security deposit.
However, if tenants have moved in without signing a lease, they may not have paid their security deposit. Therefore, the landlord will not have this option available to them. In fact, the landlord’s only avenue for recovering compensation for the property damage would be to file a lawsuit against the tenant.
Theft, Damage or Vandalism of the Previous Tenant’s Property
Sometimes one renter's move-in date brushes against another renter's move-out date. After all, landlords want to keep their properties occupied and maximize rental income.
A lease that specifies the lease start date and move-in date provides a natural buffer against such overlaps. This overlap creates obvious conflicts, including the risk of theft, damage or vandalism to the previous tenant’s property. Just as landlord insurance will not cover intentional damage to a landlord’s residence, it also will not cover theft or damage to the previous tenant’s personal property.
Typically, landlords are not liable for damage to renters’ personal property—unless they cause the damage. If a landlord allows a new renter to move into a property before the current tenant has moved out, they are likely responsible for any damage, theft or vandalism to the current tenant’s property caused by the new renter.
Habitability
Most residential leases have a “possession” provision, which states that the tenant has examined the condition of the premises and acknowledges that the condition of the premises is in good order. If a tenant has moved into the house pursuant to a verbal agreement, they are not bound by that provision. In other words, they have not certified their acceptance of the condition of the premises.
This issue is more likely to arise when a new renter’s move-in date overlaps with a past tenant's move-out date, or when there is insufficient time for maintenance and cleaning between the dates. Landlords should not allow renters to move into a property that needs cleaning, repairs or renovations—even if they intend to perform the maintenance soon after the renter's arrival.
In this scenario, a renter may claim that the property wasn’t habitable when they moved in. The renter could even escalate the issue to housing court to seek damages or avoid paying rent.
Other Terms of the Lease
When a renter signs a lease, they are bound by the terms of a lease—even if the lease date and move-in date differ. At a minimum, the lease will specify the lease term, the rent amount and the security deposit. However, it will also outline what activities are permitted (and prohibited) on the property.
If a landlord allows renters to move into a residence pursuant to a verbal agreement, they are not bound by the terms of the lease. Moreover, renters may not be aware of what they are allowed to have or not have on the property (e.g., pets, waterbeds, etc.). If such a renter violates typical lease terms, the landlord may have difficulty enforcing the terms or recovering damages for violations.
Always Wait for the Signed Lease
Landlords should never let renters move in pursuant to a verbal agreement. Landlords may want to accommodate a tenant’s early move-in request in service to a strong landlord-tenant relationship. Having a renter sign the lease before moving in may seem like a formality.
However, a lease can protect landlords from major legal and insurance issues down the road. It can also put renters on notice of what they can and cannot do on the property. A written lease sets the tone for a positive landlord-tenant relationship, both for the tenants moving out and the ones moving in.
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