Notifying Tenants I'm Inheriting

15 Replies

Good Afternoon...

I'm a month away from closing on a side by side duplex that are occupied by two tenants who I'm inheriting.  When do I send them a letter, notifying them that the rent (as of May 1st) will be payable to me?  Is this something that I should involve the current owner with, or simply send the letters?  Do I send the letters now, or when I take ownership in a month?  The tenants are aware that the property is being sold, but don't yet know who I am

Technically, you shouldn't have anything to do with the tenants until they are officially yours.  And the notice should come from their current landlord.

What you could do is draft the letter for the current landlord and get him/her to sign it and agree to let you mail it, perhaps?

I like to not have my first interaction with the new tenants include anything about money. 

Start (today) with a letter introducing yourself and giving them you/property manager's contact info, with a tone that you are there to answer any questions about the transition. 

@John White

I am going through the exact same process. We close on April 20th. I have drafted a letter introducing myself. I will also enclose an estoppel agreement (which I highly recommend). I will be sending it out soon.

@Curt McClements

Would you mind sharing a copy of the Estoppel Agreement you use (editable, if possible)?

Have you already sent the letter introducing yourself?  Did you tell the current owner that you were sending it out?

Technically you should not be contacting tenants until you legally own the property.  We ask the sellers for tenant phone numbers and reach out a week before (with their permission) saying that we are buying the building on X date and they will be getting a letter in the mail soon.  If the seller denies us that we send a letter the day before closing and stop by the day of closing and try to hand deliver it.  This is the letter we send:

Hello! This letter is to inform you that as of Friday February 27th XXX LLC has purchased this property. We have a copy of your lease with your previous landlord and will not be making any changes or raising rent. We want this to be as smooth as a transition as possible and appreciate your patience during this time. XXX is the property manager who handles all the day to day operations of rent collection, maintenance, and repair. His number is XXX so call or text him if you need anything. Over the next few weeks he would like to meet you to make sure there are no outstanding issues or problems. We know this is late notice as March rent is due, so we are not changing any late fees for rent paid before March 10th due to the late notice. Below are the rent payment options we offer and we look forward to working with you!

Rent Payment Option 1: Deposit rent to any Chase bank location to account number XXX. Please write your address and unit on the deposit slip to ensure receipt of your rent.

Rent Payment Option 2: Mail check or money order made payable to XXX LLC and send it to XXX and Please write your address and unit to ensure receipt of your rent.

Rent Payment Option 3: Pay rent in cash at Family Dollar or ACE Cash Express Stores. Enclosed is a card with a barcode on it. Just bring it to any of the locations listed below and the cashier will scan your card, accept your cash, and give you a receipt.  It takes less and a minute and is free! 

Rent Payment Option 4: Pay Rent online direct from your checking account with Cozy. It is free to use and you can set up automatic payments so you will never have late fees! Request account access by emailing XXX

When you close, post a notice on the door saying - hello, there's a new sheriff in town; party is over 

No, don't say that.  But, do put a letter on the door :)

@John White

Here is where I learned about the estoppel. I'm using their copy:

http://www.biggerpockets.com/renewsblog/2013/06/10...

I would agree about not contacting the tenant prior to closing, however, I have chosen to in my situation. The current owner is irresponsible, very difficult to contact, and can never meet any sort of timeline. I'm not going to get dragged in to scrambling trying to get things together at the last minute because of him. I could just imagine the tenant paying rent early, it going to him, and me trying to resolve that.

One tenant is leaving and the other I have met. My introduction is just a formality. I do not plan on telling the current owner. I've never met him and it takes his realtor days to get ahold of him. He's super "hands-off" and it shows in every respect.

@John White    Wait until you close, then post a notice on every door. 

This is a great time to set expectations - and do not be afraid to mention money / rent payment. In fact I would recommend that you do.

For example:

"The owners of your building have contracted with _________ to manage this property on their behalf. Any questions or communication need to be through _______. We will be handling your maintenance calls and accepting your rent payments for the owner(s) effective, IMMEDIATELY.

  • Please call or email us to update your contact information
  • Rent is due on ______ and late after ________. Late fees are _____ of your rent and will be added to your account on the ______ of every month. Accounts unpaid are subject to eviction procedures and additional late fees.
  • All maintenance items need to be made in writing. Please email __________ to make a request.

@John White

If the property is nearby me I would pick up the rent for the first few months to get a lay of the land.  


Frank

Thank you for all of the great feedback.  I don't have words for what an invaluable resource this site is. 

I've been a Managing Real Estate Broker with two national companies for many years, so if I can ever assist anyone to show my appreciation for the help I get on this site, I'm happy to answer any questions that anyone has, as it relates to agent or brokerage type of questions.  Thank you again.

I just closed on a multi-family in St. Louis with under market rents. When viewing each unit, I said hello to each tenant.  They were aware that the building was for sale.  One tenant admitted that rent should be going up and that he wanted to stay.  One had his boxes packed, ready to jump ship.  

I wrote a letter, which my property manager printed on his letterhead stationary and hand delivered it to the tenants on closing day; after ownership was official, as said by @Brie Schmidt    This was a good plan since the closing date kept moving. My letter was very business like: the address change for the next month's rent (same rate as current month), the phone number for building maintenance issues, and my wish that they stay.  The third para. was telling them that their rent would be going up one month out.  The new rent will be closer to market rent. It passed the test of my lawyer that it would help serve as a notice to resign or vacate in two months time.  The hand delivery was to soften the blow.

I welcome each to resign on a month to month lease, at the new rate, and plan to update each unit as they vacate and raise the rent again. @John White   If you want a copy, PM me.

I'm getting ready to inherit a tenant and this thread has been very helpful.  

@Tyson Luthy Have you received legal counsel of any kind to verify it is OK to change the late fee structure?  For example, if tenants are used to paying by the 3rd of each month with no late fee, can I now charge a late fee if they haven't paid by the 1st of each month?  If a late fee were $20.00 before, can I change it to $30.00? 

@Curt McClements Should I try to obtain the existing lease agreement between the current owner and tenant?  Do you think it would be of any benefit to me going forward with my new tenant?

I was under the impression that when you inherit a tenant you inherit the existing contract. if they are month to month or contract expires then give proper notice according to local laws.

Originally posted by @Edward Stephens :

I'm getting ready to inherit a tenant and this thread has been very helpful.  

@Tyson Luthy Have you received legal counsel of any kind to verify it is OK to change the late fee structure?  For example, if tenants are used to paying by the 3rd of each month with no late fee, can I now charge a late fee if they haven't paid by the 1st of each month?  If a late fee were $20.00 before, can I change it to $30.00? 

@Curt McClements Should I try to obtain the existing lease agreement between the current owner and tenant?  Do you think it would be of any benefit to me going forward with my new tenant?

You will want to get a copy of their current lease and go off of that for now. I'd encourage you to get them on your own lease asap, at that point you can outline new due dates, late fees, etc.

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