Purchasing building, long-term tenant has no lease

[Forest K.]

I'm about to take ownership of a four-unit property in Massachusetts with my partner. Neither the owner nor tenant have a copy of one tenant's lease. They do have signed confirmation of the tenant's security deposit amount. The tenant is now month-to-month and we're not really concerned about him trying to do anything inappropriate as his track record is OK (besides needing to remove some of his stuff, including an unregistered car, from the yard). I'd also prefer to keep the tenant month-to-month for rent-raising-flexibility because he's paying well under market rate. But my partner and I need some time to pull together financing for renovations and we don't want to risk having him leave before we secure it (which may be up to a year). 

Do you have any advice on how to proceed? Is it legal or advisable to have a tenant with no lease? If so, are we then required to put him under some contract? The other tenants' leases are identical across a number of years, so it is assumed that his lease is the same. Do we recreate the old lease based on the others and ask him to sign it as a replacement?   

Thanks!

[Nathan Gesner]

Originally posted by @Forest K.:

I'm about to take ownership of a four-unit property in Massachusetts with my partner. Neither the owner nor tenant have a copy of one tenant's lease. They do have signed confirmation of the tenant's security deposit amount. The tenant is now month-to-month and we're not really concerned about him trying to do anything inappropriate as his track record is OK (besides needing to remove some of his stuff, including an unregistered car, from the yard). I'd also prefer to keep the tenant month-to-month for rent-raising-flexibility because he's paying well under market rate. But my partner and I need some time to pull together financing for renovations and we don't want to risk having him leave before we secure it (which may be up to a year). 

Do you have any advice on how to proceed? Is it legal or advisable to have a tenant with no lease? If so, are we then required to put him under some contract? The other tenants' leases are identical across a number of years, so it is assumed that his lease is the same. Do we recreate the old lease based on the others and ask him to sign it as a replacement?   

Thanks!

Your offer to purchase should include a requirement that the Seller provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel is a form filled out by the tenant, then confirmed by the Landlord, 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 actually $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 exchange "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 important tool for anyone buying a tenant-occupied property.