Buying a property with tenants - no signed lease!
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
2yQuote from @Jims B.:
Your offer to purchase should include a requirement that the Seller provide all documentation and agree to sign an estoppel certificate (also called an estoppel form or agreement). The estoppel is a form filled out by the tenant, then confirmed by the Landlord, and then accepted by the Buyer. It's supposed to ensure there are no surprises after closing. For example, I often see Buyers purchase property thinking there is a $1,000 deposit but then the tenant claims it was $2,000 because they paid the last month's rent. How will you know? An estoppel certificate fixes this problem.
Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchanging "doc" with "pdf" for more options.
Here is an example and explanation: Sample Estoppel
Some have a lot of legal jargon but this document does not need to be so detailed. This is an essential tool for anyone buying a tenant-occupied property.
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8 Replies
- Real Estate Agent · Marion, IN · Member since 2019 · 134 posts · 67 votes2y
When it can be done, I try to sign a new short-term lease once closed with mirroring terms as to what everyone has already verbally agreed to.
I'd caution to expect some resistance in booting out a 9-year tenant if they don't already know it's coming. While it seems simple enough, even "good" tenants tend to cause great delays on a project like this or refuse to move, forcing an eviction process. - Member since 2023 · 1 post · 0 votes2y
Quote from @Jims B.:
Hello,
We are putting an offer on a property with existing tenants. Per realtor, tenants do not have a signed lease. Tenants have been living there for 9 years and didn’t missed any payments to the landlord.
I consulted a lawyer how to do this. He suggested to have an estoppel certificate and serve 60 day notice when we close escrow. We have to flip the property as it is in a bad condition.
What else are we missing? This is our first time to buy a property with tenants.This is in the Fresno area? Tenant isn't protected from eviction without cause? I'm down in Hanford. I wouldn't buy an inhabited property without a discount or maybe see if the holding company can hold certain funds to cover holdover expenses.
Why didn't the seller evict?
Yes, a landlord can evict a tenant without cause in California, but only under certain circumstances. According to the , a landlord can only evict a tenant without cause if the tenant has lived in the rental housing for less than 12 months. After 12 months, the landlord must have a valid reason to evict the tenant, which is called “just cause” protections for eviction. The law lists several “at fault” and “no fault” reasons for eviction, such as not paying rent, breaking a material rule in the lease or rental agreement, criminal activity at the rental housing, subletting if the lease does not allow this, and more. If the landlord evicts the tenant for one of these reasons, they must first give the tenant a written notice that states the reason. The law applies throughout California and protects many renters in California, but not all. The just cause protections apply to renters who live in certain types of housing once they have lived in the housing for 12 months. If you want more information about whether the law applies to you, you can contact the local office of Legal Services of Northern California.
Yes, a landlord can evict a tenant without cause in California, but only under certain circumstances. According to the , a landlord can only evict a tenant without cause if the tenant has lived in the rental housing for less than 12 months. After 12 months, the landlord must have a valid reason to evict the tenant, which is called “just cause” protections for eviction. The law lists several “at fault” and “no fault” reasons for eviction, such as not paying rent, breaking a material rule in the lease or rental agreement, criminal activity at the rental housing, subletting if the lease does not allow this, and more. If the landlord evicts the tenant for one of these reasons, they must first give the tenant a written notice that states the reason. The law applies throughout California and protects many renters in California, but not all. The just cause protections apply to renters who live in certain types of housing once they have lived in the housing for 12 months. If you want more information about whether the law applies to you, you can contact the local office of Legal Services of Northern California.
Yes, a landlord can evict a tenant without cause in California, but only under certain circumstances. According to the , a landlord can only evict a tenant without cause if the tenant has lived in the rental housing for less than 12 months. After 12 months, the landlord must have a valid reason to evict the tenant, which is called “just cause” protections for eviction. The law lists several “at fault” and “no fault” reasons for eviction, such as not paying rent, breaking a material rule in the lease or rental agreement, criminal activity at the rental housing, subletting if the lease does not allow this, and more. If the landlord evicts the tenant for one of these reasons, they must first give the tenant a written notice that states the reason. The law applies throughout California and protects many renters in California, but not all. The just cause protections apply to renters who live in certain types of housing once they have lived in the housing for 12 months. If you want more information about whether the law applies to you, you can contact the local office of Legal Services of Northern California. - 2yJims B.Member since 2023 · 9 posts · 5 votesOP
Quote from @Daniel Johnson:
Quote from @Jims B.:
Hello,
We are putting an offer on a property with existing tenants. Per realtor, tenants do not have a signed lease. Tenants have been living there for 9 years and didn’t missed any payments to the landlord.
I consulted a lawyer how to do this. He suggested to have an estoppel certificate and serve 60 day notice when we close escrow. We have to flip the property as it is in a bad condition.
What else are we missing? This is our first time to buy a property with tenants.This is in the Fresno area? Tenant isn't protected from eviction without cause? I'm down in Hanford. I wouldn't buy an inhabited property without a discount or maybe see if the holding company can hold certain funds to cover holdover expenses.
Why didn't the seller evict?
Yes, a landlord can evict a tenant without cause in California, but only under certain circumstances. According to the , a landlord can only evict a tenant without cause if the tenant has lived in the rental housing for less than 12 months. After 12 months, the landlord must have a valid reason to evict the tenant, which is called “just cause” protections for eviction. The law lists several “at fault” and “no fault” reasons for eviction, such as not paying rent, breaking a material rule in the lease or rental agreement, criminal activity at the rental housing, subletting if the lease does not allow this, and more. If the landlord evicts the tenant for one of these reasons, they must first give the tenant a written notice that states the reason. The law applies throughout California and protects many renters in California, but not all. The just cause protections apply to renters who live in certain types of housing once they have lived in the housing for 12 months. If you want more information about whether the law applies to you, you can contact the local office of Legal Services of Northern California.
Yes, a landlord can evict a tenant without cause in California, but only under certain circumstances. According to the , a landlord can only evict a tenant without cause if the tenant has lived in the rental housing for less than 12 months. After 12 months, the landlord must have a valid reason to evict the tenant, which is called “just cause” protections for eviction. The law lists several “at fault” and “no fault” reasons for eviction, such as not paying rent, breaking a material rule in the lease or rental agreement, criminal activity at the rental housing, subletting if the lease does not allow this, and more. If the landlord evicts the tenant for one of these reasons, they must first give the tenant a written notice that states the reason. The law applies throughout California and protects many renters in California, but not all. The just cause protections apply to renters who live in certain types of housing once they have lived in the housing for 12 months. If you want more information about whether the law applies to you, you can contact the local office of Legal Services of Northern California.
Yes, a landlord can evict a tenant without cause in California, but only under certain circumstances. According to the , a landlord can only evict a tenant without cause if the tenant has lived in the rental housing for less than 12 months. After 12 months, the landlord must have a valid reason to evict the tenant, which is called “just cause” protections for eviction. The law lists several “at fault” and “no fault” reasons for eviction, such as not paying rent, breaking a material rule in the lease or rental agreement, criminal activity at the rental housing, subletting if the lease does not allow this, and more. If the landlord evicts the tenant for one of these reasons, they must first give the tenant a written notice that states the reason. The law applies throughout California and protects many renters in California, but not all. The just cause protections apply to renters who live in certain types of housing once they have lived in the housing for 12 months. If you want more information about whether the law applies to you, you can contact the local office of Legal Services of Northern California.We will need to rehab the entire property and it would take probably 2 months
- Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes2y
Quote from @Jims B.:
Your offer to purchase should include a requirement that the Seller provide all documentation and agree to sign an estoppel certificate (also called an estoppel form or agreement). The estoppel is a form filled out by the tenant, then confirmed by the Landlord, and then accepted by the Buyer. It's supposed to ensure there are no surprises after closing. For example, I often see Buyers purchase property thinking there is a $1,000 deposit but then the tenant claims it was $2,000 because they paid the last month's rent. How will you know? An estoppel certificate fixes this problem.
Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchanging "doc" with "pdf" for more options.
Here is an example and explanation: Sample Estoppel
Some have a lot of legal jargon but this document does not need to be so detailed. This is an essential tool for anyone buying a tenant-occupied property.The DIY Landlord Book4.7248 Reviews - 2yTravis BeckBusiness MemberFresno, CA · Member since 2016 · 54 posts · 16 votes
Jim I would consider a cash for keys agreement as well if I were you. May cost a little more but could save you time getting tenants out, it ensures they leave property in current conditions, and safe guards you from having to do evictions. CA is tenant friendly so on all our flips we try and make nice with tenants and work with them. Usually for a few thousand bucks you can get them to agree. We have found that it’s a better alternative to evictions. Just my opinion though.
- Real Estate Broker · Modesto, CA · Member since 2023 · 192 posts · 77 votes2y
Quote from @Jims B.:
Hello,
We are putting an offer on a property with existing tenants. Per realtor, tenants do not have a signed lease. Tenants have been living there for 9 years and didn’t missed any payments to the landlord.
I consulted a lawyer how to do this. He suggested to have an estoppel certificate and serve 60 day notice when we close escrow. We have to flip the property as it is in a bad condition.
What else are we missing? This is our first time to buy a property with tenants.Going through this now in Modesto. One tenant left on their own and one is refusing to leave. You will be able to evict them if you are in compliance with the construction/remodel code. Property management companies tend to stay away from these issues. Tenants are 'holdover' tenants if there is no agreement and a contract is made when the landlord accepts that check. The estoppel simply proves they are paying X amount in rent and the duration, or lack thereof, that the lease is for - nothing else (and they don't have to sign it). Cash for keys should not be the primary resort, a consultation and notice to vacate will cost around $130.00 from a competent eviction service. You do not need to have the permits pulled or scope of work completed prior to serving this notice. As a good person, maybe ask if they want to leave on their own terms and keep their security deposit. If the seller can't provide signed estoppel certificates, they should be able to provide redacted bank statements reflecting the deposits of the tenants.
- Real Estate Agent · Fresno, CA · Member since 2014 · 367 posts · 174 votes2y
@Jims B. An estoppel should serve as good for the transaction, it's a legal document that the tenant has to sign stating if they are month to month, on a lease, etc.... Unfortunately we see this a lot with ma and pop Multi's, but those pain points are where the opportunity is, good luck!
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
Do NOT close without a signed lease!
Require the seller to get a Month-To-Month lease executed.
Otherwise, you could be looking at MANY months to get rid of the tenant.
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