Closing 7/21 HELP: Year-to-Year to Month-to-Month?
NEED HELP with this 4plex I’m in contract with and the last couple days of inspection period so I’m needing advice ASAP as I don’t have a lawyer for this situation to advise at this time. Sorry for the long post but I figure the details are important!
I am the buyer. The seller has been difficult to get things to me in a timely matter and also discussed having COVID issues during this precess. Closing should be July 21st.
All tenants are on month to month and this one Tenant Unit A is the property manager and on their lease, it says year to year lease agreement. The seller thinks that they can just get the tenant to sign a document that says they will change their lease to month to month but I think that’s not possible. I reside in Louisiana.
Lease Term:
“ 8. The term of the Lease is a periodic tenancy commencing at 12:00 noon on July 1, 2020 and continuing on a year-to-year basis until the Landlord or the Tenant terminates the tenancy.”
I’m wanting to increasing rent by $200/mo for Unit A and I requested a credit towards closing from the seller to offset the loss of income.
From my realtor:
“The sellers broker said that they will not agree to the credit for unit A but it is their opinion that the language of the lease allows them to convert the lease to a month to month lease. They said that they will have the tenant sign a month to month lease immediately if that is your wishes. Please advise. “
It's hard to read the text of the lease to really get a good idea of what it says, but here are my thoughts on the information you provided.
I can't really tell under the terms section of the lease what the tenants right to possession is. Does that say he has possession until June 28th, 2026 or 2020?
If that is 2026, then the lease states that "any notice to terminate the tenancy must comply with the applicable legislation of the state of Louisiana. I would look into what owner rights are in this particular situation to get an understanding of what you can do vs. not do.
However, from the sounds of it you would like to keep him in there and amend the lease agreement currently in place. Under the Amendment clause it simply states that any change to "the lease may only be amended or modified by a written document executed by the parties". This could be as simple as having the current owner approach that tenant about changing the lease to month-to-month & increasing their rent $200. If he agrees, then you're all good. If not, then it looks like you would default to the "lease termination" above.
The other possible scenario here could be that the landlord botched the lease agreement and put the possession date to before the lease started. If this lease does end up being valid, it would need to be resigned from last year. If it was not resigned for this last year, I would look for a clause regarding what happens after the lease term in up. In the lease I use for my units our yearly leases default to month-to-month.
I know it's probably as clear as mud, but hopefully this helps.