(Reposting this question under the appropriate category)
We did it, purchased a 4-plex so my husband and I are renovating our side of one duplex. All the units are rented out so we inherited the seller's tenants and lease agreements. When we viewed the property months ago, 2 units were being vacated. At closing we found out the seller rented out these 2 units (after accepting our offer) - one on a 6 month lease and the other on a 12 month lease. We wished she would have at least told us or asked before signing them up. One of the issues we have is that both the lease agreements list only one tenant but there is another person staying with them. How do we address this issue? We'd like to amend the agreements - if we can - to add a 3-strikes rule for any disturbances. We've already encountered the tenant's drunk boyfriend who challenged us that he owns the place and pays rent (yet he's not on the lease). My husband verbally told the tenant she's in violation of the lease. I appreciate your input and advice in advance. Don't get me wrong - we are very happy with the purchase of this property. We love it, just a couple of issues.
Does the original lease specify the occupants allowed under the lease? Is it a standard lease from realtor's association (covers most circumstances)? Or poorly structured? You can also remind them that regardless of the lease, tenants are responsible for their guests and the actions of their guests, including the peaceful enjoyment of the premises for other occupants, including yourself.
You are basically stuck with what is in the leases though, then within your landlord rights.
You can always approach them that if they'd like to continue the lease after the original lease term, you'd like to start developing a constructive relationship.
Is your real issue that there is 2 people? Or that the person not on the lease is a drunk a**hole?
And congrats on your first purchase! I did an owner-occ 4plex for my first property, and best decision of my life. (But vacant REO ;)
@J. Martin - thank you for your reply. The leases are general, stating: name of tenant, amount of rent and when due, and some responsibilities of the tenants. We are going to add specifics in future agreements. Our issue is the one person listed on the lease but they obviously have a roommate. Our approach will be keeping tabs on any disturbances and/or violations. Thank you for your input - it gives us a better handle on this situation.
Usually a lease states the name of the individuals on the lease, and it ALSO states the individuals that will be living there. There may be more people living there than are on the lease. That's why a good lease states both. So you could have some technical difficulty with an eviction solely on that basis. I agree. Keep track of disturbances. Notify them in writing, and keep all copies of notifications. Written documentation will always hold up better!!
@Martha T. It is a little late now, but there are a few things that could have helped you stay out of this situation. One is making sure that your purchase agreement states that the seller is not allowed to enter into any material agreements (like signing new leases) without your consent while the property is under contract. Although the seller still owns the property, they can not enter into any agreements that impact your eventual ownership without permission. If you have that in your purchase agreement and they violate it by signing new leases without your consent, you can cancel the contract and get your earnest money deposit back.
The other thing that helps is make sure all tenants sign an estoppel prior to the end of your due diligence period. This clarifies what is in the lease, and it must be signed by the seller as well. Estoppels get everyone on the same page and eliminate confusion about the lease terms.
If your tenant's lease only lists one tenant (not sure if it says anything about not letting anyone else live there), and she is in violation of the lease, you can begin proceedings to have her cure the default, or get evicted. Note verbal notification is no good...must be in writing.
I'm not a lawyer, haven't seen your lease, and don't know the laws in your state, but it sounds like you may have options if you do want this tenant gone.
If both of your tenants are paying their rent on time I would not make too much of an issue out of this. The tenant that has a 6 month lease will be gone soon anyway. Would they happen to be the one with the drunk boyfriend?
Thank you all for your input. I have scheduled a consultation with a real estate attorney. The last paragraph in the lease states "Termination upon sale or renovation of premises...the landlords may terminate this Rental Agreement upon 30 days written notice to the Tenant that the premises have been sold or are to be renovated." This gives me some hope. And yes, the tenant with the drunk bf has the 6-month lease.
@Brad M. - thank you for the advice. That is something we'll definetely use in our next purchase! ;)
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing