Why would a landlord not have a lease agreement?

Question

Andrew B. · Answer

First off, every landlord has a lease agreement with any tenant that moves in and pays rent. Acceptance of monthly rent payments constitutes a legally binding, month to month, ORAL lease agreement. Just because this contract is not written, does not mean your local state laws apply any different. With an oral agreement however, you have no control over what the tenant does, as long as it does not break state landlord tenant laws. This is why you want written agreements.

To address your other points, when buying a property with inherited tenants you need to get the current landlord and tenants to sign estoppel agreements. This will outline current rent, current deposit, and any other outstanding agreements. This protects you so tenant cannot claim security deposit was $10k, nor can landlord pretend security deposit didn't exist so he can keep the cash.

You can request the landlord put the tenants on your own written lease as a contingent of your offer, but UNDER NO CIRCUMSTANCES should this be a year long lease. Only put inherited tenants on month to month leases, as you have no way to know if they are good or bad tenants yet. If you do not do this prior to purchase, you must do this after purchase. At no point should inherited tenants be allowed to stay on an oral lease unless you are immediately getting rid of them.

Before continuing further, I hope you download a copy of your local landlord/tenant laws. This is a business and you are responsible to know the laws.

Curtis Rouse Jr · Answer

@Anthony Grandinetti

I agree with @Andrew Boettcher in the fact that prior to closing on this deal, you need to ensure that all income is verifiable and as this is the lifeline of your investing business (income). If the owner doesn't have this information or unwilling to provide, first that should be a red flag and secondly you can do what I do when I'm shopping apartment communties, go secret shopping meaning show up to the property and pretend as if you are a potential tenant and find out how much they are paying in rent/deposit. This will also give you insight of the condition of the property and if any rehab needs to be done to the rented out units and possibly the vacant unit. Best of Luck and I hope this helps!!!