State Specific Question About: PENNSYLVANIA (PA)

I've been looking at the debates about m2m vs lease and I considering two options in setting up my leases and wanted to get some feedback.

Option 1: A month to month lease with a clause that the tenant must renew for some minimum number of times (i.e. 6 months) or be ineligible to get their SD back. Alternatively, I could set some sort of fee tied into not renewing for at least 6 months. If I decided to not to renew them, they would be eligible to get their SD back

Option 2: Do an annual lease with an early termination clause for the tenant and myself. It would be similar conditions to option 1 above for the tenant. If they exit early, they'd paid a fee/lose the deposit. If I want to exit early and get rid of them, they'd simply get their SD back except for damages.

How do these sorts of provisions stand up before the magistrates?

Option 1 will not stand up nor will any option where the tenant forfeits their Security Deposit unless it is for damage beyond normal wear & tear or unpaid rent.

Option 1 is illegal and if you have any illegal clause in your lease, the judge can throw the whole lease out. Don't use it.

To answer your question: “clause for me where I can opt to terminate for any reason with a 30 day notice” the answer is no

Under contract law, not only do you need consideration for a valid contract, the consideration must be mutual, meaning either party privity to contract can end the lease with 30 day notice or if its solely the LL call to end the lease such provision violates the mutually requirement for consideration , even if the tenant agree to in contract

On the issue of a month to month with additional terms to terminate, in regard to residential lease agreements , the state statute/law is the controlling authority, hence if PA law states a full month notice is all that is required to end a month to month then you cannot expand on that notice time line to end a mtm

At one time I had over 100 rental units that I owned and managed myself. Most of my properties were in the "bread and butter" areas. Nothing too special except I am a contractor and I made everything right! Good condition, updated and on a budget. I had very competitive rents so my tenants could live there a save a buck or two each month.

Most landlords don't understand that your second worst enemy besides a tenant not paying rent is "turnover"! Each time a tenant moves it's possible I'll have to paint, change some of the flooring, maybe an appliance and window treatments. Those costs and a month of lost rent can run $3,000 to $5,000 per turnover. SO WHY WOULD ANYONE IN THEIR RIGHT MIND GIVE A TENANT A MONTH TO MONTH LEASE THAT THEY COULD MOVE OUT WITH ONLY A 30 DAYS NOTICE? I'D HAVE TO BE A LOUSY BUSINESSMAN THAT WAISTED 4 YEARS IN UNDERGRADUATE SCHOOL AND ON TO GRADUATE SCHOOL.

Another problem is, no decent tenant would sign on to either of those options. Essentially, you are saying that you want to tie them down for 6 months or a year, but you want the option of kicking them out whenever you feel like it. Only a loser would sign up to those terms.

Is that really the type of tenant you want to attract? What you will get is desperate people who will sign anything. Then they will trash your place, slip out in the middle of the night, and laugh at the lease that they signed.

screen you tenants carefully and you will likely never need to give "early" notice.

Everyone is so afraid they will want to send someone packing and are looking for ways to do that. Rarely have I ever wanted to send a paying tenant that I screened property packing. When I did, it really was just because they were difficult. I toughed it out until the lease was up and they moved. Never cost me a penny.

Rick, there is such a thing as a lease with optional renewal periods where one side has the option to renew rather than it being a mutual agreement. Commercial tenants all the time sign leases where they rent for a year and have an option to renew it for another year, sometimes at a slightly higher rent. Whether a judge would allow that in a residentila lease, where the landlord owned the option, I don't know for sure.

"Like others have said, you can tell people to move (terminate their MTM agreement) but there is no assurance they will actually move."

Very true, however the legal issue is reduced to a holdover as opposed to proving some other issue. I'm not trying to be capricious about any of this, but by the same token I've got to be realistic about the area where my building is located. It's an area in transition, but the current tenant demographic is low income/working class and sometimes there are issues. Also, someone can screen well and turn out to be a PITA or their circumstances can simply change.

If a tenant is paying, complies with the rules and isn't a hassle, I have no reason to get rid of them. However, if they can't do that, I do need some flexibility without having to run to court. I'm not crazy about turnover either, but lease or not, this demographic is less concerned about commitments anyway so a year's lease won't prevent them from moving. So given the facts on the ground, the issue for me is how can I best manage. I see the m2m scenario giving me flexibility for getting rid of problem tenants. The downside is the turnover---but I could have that issue anyway as year's lease doesn't ensure they'll stay that length of time---just as a m2m termination doesn't guarantee they'll move.

Don, “there is such a thing as a lease with optional renewal periods” was not the issue in this post.

Gkarl wanted a fixed term lease but with an option for only the LL to cancel the lease for reason X before the end of the fixed term of the lease very different than a renewal option at the end of a fixed term lease period

In Gkarl fixed term lease, consideration is not mutual, simply because LL for any reason can terminate the fixed term early without penalty but the tenant is legally bound to the entire period of the fixed term lease

"In Gkarl fixed term lease, consideration is not mutual, simply because LL for any reason can terminate the fixed term early without penalty but the tenant is legally bound to the entire period of the fixed term lease"