Buying a property with tenants - no signed lease!

[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.

[Nathan Gesner]

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.