Can I sign a lease before I own the property?

7 Replies

Hello BP,

We are purchasing a new property, should be closing April 3.  One lease is up May 1, there are 3 tenants but only one wishes to stay.  She wants to move in her mom and sister.  

I am happy to let them apply and make sure they qualify (3x rent in income, no criminal background and no evictions) before we close, but can I sign a lease with them?  I am guessing it i better to just qualify them and wait til we close.

Thanks in advance!


Not positive, but I did it and the person signing the lease was an attorney with a real estate background so I'm pretty sure it was fine. Of course, the start of the lease term was after the closing date.
She and my agent said that if I didn't get the property the lease would just be void. You could also put a clause in to that effect. Key is to let her know what's going on.

Thanks Becky, that makes sense.  

Maybe given the timing, they should arrange to sign a lease with the current owner just in case, with a clause that it is void once the property transfers to us.  


Just have the seller sign the lease with the tenant. You will inherit the lease when you close on the property.

Wait until you close, you have plenty of time to run them through your application process and sign them to a new lease for May 1 if they are tenants you end up approving.

A Lease Agreement is a binding legal contract.  You cannot enter into a legal binding contract when you do not legally own the home right now.  

Nancy Neville

You must be a property owner to grant an interest in the real property to a tenant.  While being in contract gives you a limited interest in the property, you do not have a full bundle of rights that comes with ownership.  

You can execute a lease to go into affect if and when you become an owner.  Since once an owner, you have the legal and equitable rights to grant a tenant interest in the property to use.  

Be practical when approaching the situation, the tenants may not want to be on the short end of the stick by executing a lease with the current owner which is set to expire in a month then you requiring the tenants to essentially reapply.  That could leave the tenants with a little less peace of mind than they desire and you could inadvertently send them packing.

You may want to discuss your current restrictions or lack thereof as it relates to the current owner executing a long term lease with said tenants which you then have obligations to as the new property owner.  Perhaps giving an addendum requesting that no long term lease is entered into before the closing date.  Your agent should be able to help you draw up agreeable terms with the Seller to preserve both of your interests.

@Max T.  - the trouble is I am not sure how strict they are (or would be in this case) about screening.  Or if it is even legal for them to sign a lease that starts after we will likely take possession.  

@Michael Noto  - sounds like a plan.  I normally like to sign a lease 2+ months in advance (typical for my market) but in this case it is just not possible.

@Nancy Neville  

That makes a lot of sense.  I spoke with one of the tenants that is leaving, and told her that I didn't think I could sign a lease with the others until I owned the house but I would look into it.  Since the lease ends so close to the target closing date, I wanted to see what their intentions were.  I will talk to my realtor about making sure the seller doesn't sign any new leases.

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