About to buy property that has an existing tenant

About to buy property that has an existing tenant by JK (OR) on July 31, 2012 @12:34

We are in the process of purchasing a piece of property that has a home on it that is currently being rented. In the paperwork they are asking if we would like to have the current property owner evict the tenant, or if we would like to let them stay on and rent from us and handle evicting or setting up a new agreement with them after we take ownership.

We have NO information as to what type of contract/lease/deposit the current tenant has with the current property owner. The realtor we are dealing with is dealing with an attorney for the "estate" that owns the property and he seems to be having a hard time getting any type of solid information.

We will not be able/interested in living on the property ourselves right away and we had thought it might be helpful to have the income from a renter in the interim to help make some improvements and such but we are also concerned about the legal technicalities.

Concerns like... if we want to be on the property (acreage) doing work, are we going to have to notify the tenants every time or stay more than ** feet away from the house or something like that?

Will we need to create all new lease/rental agreements with the current tenant before or after we take ownership?

We are just wondering if we would be better off having the current owner evict the current tenants and start from scratch ourselves with someone new or what, we have never owned property/homes that we rented out before and have heard so many horror stories about problems getting bad tenants out...

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Re: About to buy property that has an existing tenant by Anonymous on July 31, 2012 @12:46	[ Reply ]

Here's what I would do. I would NOT close escrow until the tenant has vacated the property. If this is not going to happen, I'd walk away. I would NOT buy the place and then "hope" the estate would evict--I'm not even sure that's legal. And what are you going to do if it is legal but the tenant won't go? Do NOt set up anything based on its-gonna-happen-after-we-take-ownership.

Re: About to buy property that has an existing tenant by Anonymous on July 31, 2012 @12:48	[ Reply ]

The selling agent must provide the lease in effect at the time escrow closes as well as the deposit being held and the tenants original application would be nice. Devoid of a lease, you are in a mtm situation. Id be leery if i knew NOTHING of a potential tenant. So, you have two choices - have the seller deliver the property EMPTY to you or, again, without a lease, you have the present tenant fill out YOUR application and if you are satisfied, have them sign YOUR lease. If there IS a lease in effect, you must honor it until it expires.

Re: About to buy property that has an existing tenant by Jake on July 31, 2012 @13:17	[ Reply ]

Evict the tenant and let the estate settle up on the tenant's deposit. Otherwise, you will be paying the deposit and you do not know what kind of a tenant you will be getting. The tenant does not have to allow you access to the property for the work you have planned. If the estate does not evict the tenant, you will have to evict him at your own cost and return the deposit which will be whatever the tenant says it is because you will have no paperwork.

Re: About to buy property that has an existing tenant by NY-LL on July 31, 2012 @14:02	[ Reply ]

The circumstances may require a prospective buyer (potential landlord) to be more proactive, in order to obtain the pertinent information. The current tenant may be an asset to the new property owner, in that the current tenants are more familiar with the property and may be financially qualified and stable tenants. The prospective buyer (potential landlord) should approach the current tenant for a discussion about their relationship to the property -- the written lease agreement terms, the status of rent payments, proof of payments, etc. The discussion with the current tenants will assist the prospective buyer (potential landlord) in the decision-making process.

Re: About to buy property that has an existing tenant

Re: About to buy property that has an existing tenant by Franklin (TN) on July 31, 2012 @14:47	[ Reply ]

As stated, you must let the tenant run out their current lease. If there is no lease the tenant or current landlord can come up with, the tenant is month to month. If that's the case, you can tell them you are not renewing their lease for the next month and they'll have to go. Whether or not they'll go is the issue. You just have to ask yourself if you want to fight that battle if they refuse to leave in a timely manner. As for the concerns, the lease is likely for the whole property, not just a section. If there no lease to state otherwise, a judge would likely rule that the tenant has control over the whole property. That's something you could work out with the current tenant, but again, if he agrees to something at first and decides he doesn't like the agreement down the line, you're in a pickle. It sounds like this land is out in the country where there are not a lot of rentals to be had. If the rental market is scarce, the tenant will probably have a hard time leaving without issue. Ideally, I would confirm with both the tenant and the current owner that there is no lease, which it doesn't sound like there is. Then I would ask the current owner to get rid of the tenant. It may sound good now to get some extra income, but the potential headache is too great.

Re: About to buy property that has an existing tenant

Re: About to buy property that has an existing tenant by JK (OR) on July 31, 2012 @14:50	[ Reply ]

Thanks for the feedback all. The more I read and think about this the more I think I need to take the opportunity that I am given in the purchase process to just have the current owner/estate evict the tenant. We don't know them at all and I think they are friends of the family to the current owner so I doubt if there is much formal paperwork involved. I just feel there is too much vulnerability for us on this. Even if there is no deposits, if the tenant damages the home after we take ownership, or simply refuses to leave or pay rent, then we have little recourse and we are unable to even use our new property. If we demand the current owner evict the tenant and allow us to verify the home is still in good shape BEFORE we close, then we have more power to say "sorry your tenant caused damage, we aren't signing anything until you fix A,B, and C". If we wait till after we own it, we have almost NO power it seems. At worst we have to find someone willing to rent the home with the foreknowledge that we will be on the property doing work and improvements on a regular basis.

Re: About to buy property that has an existing tenant

Re: About to buy property that has an existing tenant by nicey (Florida) on July 31, 2012 @14:58	[ Reply ]

I would also first get tenants name and check if he has any evictions on his name or any one else living at house. Another good idea is to call the police department and ask if there has been any activity at the address for the past 3 months. If those are good then I would go see tenant he may fill out an application with some past rental history and then you can precede with writing a lease. If the seller doesn't have a lease ask him how much his security deposit was and then make sure you get that much at closing. He may be a great tenant or he could be the tenant from hell if so let them get rid of him. Then make sure you get another walk through before you go to closing since sometimes tenants can do alot of damage during an eviction you could end up with all the appliance gone and the house gutted. Hope this all works out well for you!