Purchased Building With No Record of Leases

11 Replies

Recently we purchased a 9 unit apartment building from the bank. The bank had very little documentation pertaining to the old leases for the current tenants. I didn't mind buying the property without the leases because we were getting such a good deal from the bank. However in our attempt to implement effective management and gain control over the building we are wanting to have our existing tenants all sign new leases and fill out informational applications. Any tips on how to compel or incentivize tenants to do so? Thank you.

We have done this quite a few times:

- Day 1, send a letter, noticing change of ownership, how to pay you and some basic information about your company. Work on signing leases with whoever is willing.

- Day 3-5, 3 day notice every tenant that doesn't pay you. In my experience it is typically 50%.

- Day 10-15, start evictions on the people who are non responsive.

Our lucky has varied across buildings. There are usually a couple people who are talkers and you need to provide them comfort and answer their questions.

Good suggestions; thank you...however in my experience starting a landlord/tenant relationship by threatening eviction is not something I'm comfortable with. I like to start with a clean slate and get to know my tenants rental behavior before 3 Day'ing them so quickly. Any other recommendations?

@Jared K. - other than waiting perhaps until the 5th I'm not sure what the other option is besides giving them a 3-day notice if they don't pay. I don't think it's threatening eviction as much as it is asking people to pay rent to live at a property which is pretty reasonable.

Now, as far as how to initially approach them, you could also tell them about some nice features your company has (i.e. 24 hr maintenance, responsive management, etc.). And you could even do a "get paid to live here" referral program where you pay them XXX amount for referring someone who ends up moving in.

But as far as people not paying by scheduled date, as @Steve L. recommended, I think you have to take a hard stance after the 5th - unless you think there's some sort of miscommunication on how or where to pay - but that should be addressed in the initial letter.

@Jared K. We start with a soft approach with a service attitude and it works well for us. We specialize in low-income properties. We find when we treat our tenants with respect and communicate clearly and fairly, we get the same in return (except in rare cases).

When we bought our 8-plex we introduced ourselves to each tenant first in a letter and then in person. We started off by not raising any rent and immediately attended to deferred maintenance items. That won the tenants over. Then we started making upgrades. Later we adjusted the rents to the appropriate levels. All of our tenants happily signed our rental agreement from day one and started paying rent to us. We use MTM rental agreements instead of longer leases, so we are able to make adjustments quickly if necessary.

If a tenant does not pay rent on time, they receive our late rent letter, which serves as a friendly reminder of the rent that is due and also the late fee that is now due. It also explains the consequences of not paying rent. We wait one more day before serving the "pay rent or quit" notice. Then it is no surprise to the tenant and demonstrates we are attentive and serious about rent.

Since you lack documentation from the bank about the previous landlord-tenant agreements, try to get that information from each tenant, either by conversation, by them giving you a copy of their previous rental agreement or if necessary by the more formal estoppel route. It will be helpful to you to know each tenant's expectations, as that will be the starting point for negotiating with them. You can come down hard on tenants with a decree, or you can dialogue with them and win them over. The result of them signing your rental agreement may be the same. But the more gentle route will build relationship, which will serve you better in the long run.

People always like to feel some sense of control over their own destiny, so present this as their choice... to stay with you by abiding by your rental terms or to find another place to live. If they try to stay without abiding by your terms, then follow through on eviction action. Be kind, firm, and fair.

Originally posted by @Jared K. :
Good suggestions; thank you...however in my experience starting a landlord/tenant relationship by threatening eviction is not something I'm comfortable with. I like to start with a clean slate and get to know my tenants rental behavior before 3 Day'ing them so quickly. Any other recommendations?

After being notified of the new ownership, if your tenants don't pay you by the due date, that's all you need to know about their "rental behavior". This would be true of all tenants, regardless of whether they came with the property or you put them in place after reviewing their application.

You never want to wait on serving the quit or pay. Give notice on Day 3 or Day 5, but don't put it off. It's not just about being firm and training the tenants that plan to stay. It's also about gaining access to the units where the tenants won't be staying. Every day you don't notice and follow through with an eviction is a day you have no income from a unit with a non paying tenant.

Thank you everyone for your responses. Let me be more clear ... We are not having issues collecting rent. Our tenants are wonderful. We have solid control over the building and tenants. The issue is we don't have any books and records on file and we would like to have written leases with our tenants in the event we have issues in the future.

I would get leases together for each unit, then go to each one personally. You can meet them and have them sign the new lease right then. You can also give them a basic information form to complete. If all signers are not home, leave it with them and tell them you will be back in 3 days to pick everything up.

Originally posted by @Jared K. :
Recently we purchased a 9 unit apartment building from the bank. The bank had very little documentation pertaining to the old leases for the current tenants. I didn't mind buying the property without the leases because we were getting such a good deal from the bank. However in our attempt to implement effective management and gain control over the building we are wanting to have our existing tenants all sign new leases and fill out informational applications. Any tips on how to compel or incentivize tenants to do so? Thank you.

When you say very little documentation, do you mean some? Or none? If your tenants produce leases executed before the foreclosure date, and assuming the lease is property executed, the lease is binding you as the new owner. If they have existing leases, they may or may not be interested in signing a new lease and are not required to do so.

Do you have any knowledge of any existing leases for any of the units? Or were they month to month?

When you meet the tenants in person let them know who you are and how to contact you 24/7 if anything goes wrong with the unit, and most tenants will respect you when you say I am the owner and contact me anytime if there are a problem and smile and say I don't screen my calls or use a Google guru voice mail, I answer my phone.

Joe Gore

I guess your original post was unclear and I assumed the tenants were not paying or hostile towards the previous owner.

If they pay, I would handle it very differently.

Why don't you give a $50 - $100 gift card to every tenant who signs a lease within the next 10 days?

How do you know what they pay and the terms of their lease?

After you have properly introduced yourself as the new owner, I would simply ask them to sign the new lease agreement and see what they say.

[Smile] "This is our lease agreement. .... We would like you to sign it as soon as possible. Please read it carefully. If you have any questions please ask. Here is the easiest way to contact me. .... I will be back in two days for your signature. If you would prefer to continue under the terms of your previous lease agreement until its termination, you will need to supply me with a copy. Thank you." [Smile]

If they choose the latter, verify any copy they might present and get estoppels. If you want them to choose your lease, in some way make it favorable for them in some way to do so. Everything is negotiable.

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