Non-Renewal of Leases: Hidden Concerns

By Mark Zinman | Zona Law

In Arizona, at the end of a residential lease, a property owner or resident cannot renew the other side for almost any reason. It’s possible a unit needs to be renovated or there have been on-going problems with a resident that the landlord chose not to previously evict upon but that give rise to the non-renewal. It seems that there has been a rise of residents disputing non-renewal notices that were served. Therefore, it’s important that property owners not only know their rights, but also their legal obligations and restrictions when it comes to non-renewing residents.

First and most importantly, an owner can non-renew a resident for any reason as long as they are not discriminating or retaliating. An example of discrimination would be if the resident is disabled and asked for various accommodations and the property owner decides they are tired of addressing such requests. If they deny the resident for that reason, that would be discriminatory. On the other hand, retaliation is defined by statute in A.R.S. 33-1381. Retaliation is when an owner non-renews a resident (or takes other negative action) because: 1. The resident complained to a governmental agency charged with responsibility for enforcement of a building or housing code of a violation applicable to the premises materially affecting health and safety; 2. The resident complained to the owner about their obligations to maintain the property, as set forth in ARS 33-1324; 3. The resident joined a tenants union; 4. The Resident complained to a governmental agency charged with the responsibility for enforcement of the wage-price stabilization act. (We have never seen the last one happen). 

It is important to note that if any of the four previous items have occurred within the last 6 months, there is a presumption that the owner is retaliating. This means it presumes that the landlord is retaliating, and the landlord then has to overcome that presumption and show the real reason for the termination. This creates an additional burden or higher evidentiary standard, than is normally required in a non-renewal case.

After you serve the non-renewal notice, if the resident comes to talk to you about it, you should simply state “It was a business decision.” You should not start listing out the problems, as that simply leads to arguments and further issues. 

In an eviction, civil lawsuit by the tenant or fair housing complaint, the owner will need to demonstrate the lawful reason for the termination. Therefore, it is important to document issues during the term of the lease, and not merely say you will non-renew them when the lease expires. Owners should have courtesy notices, noncompliance notices or other notices sent to residents when issues arise. This not only puts the resident on notice of the problem, but it also documents the issue for the non-renewal. Ideally, a perceptive resident should not be surprised when they get served a non-renewal notice.