Kansas City, KS-MO · Member since 2013 · 36 posts · 10 votes
Earlier this week we distributed rent increase notices to tenants at a property we purchased a couple of months ago here in Kansas City. The leases we were provided by the seller had all expired and were now on month to month agreements. We were shocked to hear from several of our tenants that the leases we were given were not the most recent copy.
After making some calls to understand who failed to disclose the correct lease agreements, the property manager informed us that she had signed new lease agreements with several tenants after we put the property under contract. One of the leases signed in February of this year is valid through June 2019. The property manager said that she typically does not consult the Owner when leasing the property, and had never disclosed these new leases to the previous Owner or listing agent.
What should we do now? The current rents are drastically below market, and our financials were based on upping rents to market in the coming months.
Property Manager · Grand Rapids, MI · Member since 2018 · 97 posts · 80 votes
8y
It sounds like the property manager does not still manage the properties, correct? If they do, fire them immediately. Occasional PMs will not notify owners of a new lease signed, but that never should have happened when the property was for sale, as rental income is a huge factor when purchasing a property. If it was condition on the PA that current leases were to be provided at close of the sale, then you are within your rights to sue the seller for not disclosing the current leases. If it was his property manager, it was his responsibility to ensure that he was providing you with the current leases, especially if he knows his PM does not check with him before signing leases.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
8y
I agree, easy to threaten to sue for the difference between the two. I would just send a demand letter outlining the reason that you a claiming xx due to current leases not provided, and agreement that they be provided prior to close (hopefully that is the case). It's pretty easy to threaten a personal judgment and I think they would probably just pay up on the difference. What are we talking in lost rents?
Investor · Pittsburgh, PA · Member since 2015 · 1k+ posts · 1k+ votes
8y
@Dar Fornelli dont sue thats insane. Nothing good will come of it trust me. if they are month to month lease then start to increase the rents if the market will bear it. Learn from your mistakes and take immediate action to get the rents up to where they should be. If you take legal action it will most likley get you nowhere and cost you money. talk with a good RE attorney who is trustworthy and not just looking to get legal fees from you and they will tell you the same thing.