Buying Tenant Occupied Property

9 Replies

I am on the verge of purchasing a tenant owned property with 3 units. Since I did not screen these people, is there a way I can get all of their info (names, DOB, social, jobs, etc) legally? I'd like to have this information for my safety in case it ever turns bad.

Also, before closing, am I able to get:

1. Past leases/rental agreements that tenants have signed? 

2. What happens if no agreement has been signed? Should I create one the minute I hold ownership?

3. Anything from seller stating what current rents are and that they will not change between signing P&S and closing?

4. Does it make sense to ask for pro-rated rents paid to me if we close in the middle of the month, or is it not worth the hassle?

Thanks in advance for all the anticipated responses!

1.Yes

2.Yes

3.Yes

4.Yes

Remember your buying a Business not just a piece of real estate. Contracts=proof of a good business. 

Originally posted by @Carl C. :

1.Yes

2.Yes

3.Yes

4.Yes

Remember your buying a Business not just a piece of real estate. Contracts=proof of a good business. 

Thanks Carl, now the main question is...do I do all of this before signing the P&S? Or after?

Yes. I always create a new tenant/relationship package. Within that package is my application and I request that everyone over 18 years of age complete my application.

The seller will supply you with copies of the leases that are in place. You must adhere to these agreements until they expire and then you have the opportunity to place your tenants under new terms or serve them a 30 day notice to vacate.

At the closing you will receive prorated rents and the full security deposit credit for all the tenants. The owner will supply you with a rent roll that includes the tenants name, rental amount, and security deposits.

Originally posted by @James Morris :

Yes. I always create a new tenant/relationship package. Within that package is my application and I request that everyone over 18 years of age complete my application.

The seller will supply you with copies of the leases that are in place. You must adhere to these agreements until they expire and then you have the opportunity to place your tenants under new terms or serve them a 30 day notice to vacate.

At the closing you will receive prorated rents and the full security deposit credit for all the tenants. The owner will supply you with a rent roll that includes the tenants name, rental amount, and security deposits.

 Is all of this mandatory? I'm purchasing from an owner who didn't seem to be much involved in the home they are selling. Worried that documents you mention do not exist.

Originally posted by @Karyn T. :

You ask for it.  As the buyer, you have the legal right to do so....and to walk away if the info is not provided, bad, or has other red flags.

before or after P&S?

The proration of rents and transfer of security deposits are mandatory. Your attorney should make sure those credits appear on your good faith estimate and appear as credits. 

The leases must be provided or the sellers attorney will have the tenants sign a document stating their agrees terms and rents.  

@Robert P.

Don't forget to get an E-stopple letter from the seller. 

Absolutely make sure that you receive a copy of the leases as you will be bound by the terms of those contracts.  If the seller says that there are no written contracts, have him confirm (put in writing) that there are no written leases/contracts, and if so, check to see if in your state what that means (e.g. month-to-month tenancy?).  You are inheriting those tenants and those tenants have rights - the question is what rights to they have?

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