Inherited a tenant who did some improvements prior to purchasing

Investor · Minneapolis, MN · Member since 2012 · 155 posts · 41 votes

Hello,

I recently acquired a property with a tenant already in place. This tenant has lived in the unit for 10+ years. The tenant (prior to my ownership) replaced a few light fixtures and put new flooring into the living room. The last property management company's lease is coming up soon. If I elect to not renew my tenants lease what are the complications with the past improvements. The fact that the tenant did the flooring was not disclosed and only came to light recently. Any thoughts?

Eric

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Joshua D.
Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
11y
What dose the lease stipulate on such improvements? A good lease should spell out what happens in these situations.
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Joel OwensBusiness Member
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
11y
"The fact that the tenant did the flooring was not disclosed and only came to light recently."
Did you get ESTOPPELS on each tenant before purchasing the property?? If you didn't can create a mess for you later. Did you buy the property AS-IS with no warranties or representations from the seller??
If you didn't take proper measures a judge if you go to court could say you had your "right of your own inquiry" to investigate and chose not to so you have to live with the consequences.
The estoppel basically says that only what is written into the lease version you have is correct and there are no undisclosed documents written or verbal agreements to the contrary.
If the tenant will not sign then you know there are undisclosed issues you need to address before you buy if at all.
No legal advice given.
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Eric Gutierrez
OP
Investor · Minneapolis, MN · Member since 2012 · 155 posts · 41 votes
11y
In reading through the lease a couple times I do not see anything that directly discusses tenant improvements.
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Eric Gutierrez
OP
Investor · Minneapolis, MN · Member since 2012 · 155 posts · 41 votes
11y
Just found a clause.
Tenant Promises: b) Not to paint or wallpaper the Premises, or make any structural changes in the Premises without the prior written consent of MANAGEMENT.
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John PowellPro Member
Real Estate Agent · Kennesaw, GA · Member since 2015 · 308 posts · 153 votes
11y
I'd talk to the tenant and see what they are thinking. If they have been in place for 10+ years and have no plans to leave then i'd just clarify what you expect when they leave in writing. they may expect nothing and have just done it to improve their living space. you could correct it with a memo stating what improvements have been done and that they will stay with the property and have the tenant sign it. Why do you want to get rid of this tenant? is their rent way below market?
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