Well I broke down and bought business cards, and I'm not sure why I waited so long. I gave one to a contractor that I got a bid from and asked him if he knew anyone selling homes. He put me in contact with a seller of a 4-plex. We started to hammer out terms on doing a deal, but his numbers seemed off. He was getting WAY more rent than I would have thought for the area. When I asked him about copies of the leases, he told me that it was against privacy laws to show me them until after closing. Is this true???
Now I don't know much about real estate, but unless it is a PA thing, and I highly doubt it, that is the biggest pile of Bull I have ever heard.
That's what I thought. I walked away for other reasons, but I wanted that info for future diligence. Thanks.
I can maybe understand him not wanting to show you their applications till after closing, because those have a lot of personal info on them: birth dates, ss#, etc.
But, the lease has no personal info on it. There is no reason for him to keep them from you. In fact, it is standard business practice to see a lease when you buy a building with tenants in it. Sounds to me like he is hiding something. He may be reporting more rent than he is actually getting.
Not disclosing the leases until after Close is simply silly. The leases are required to perform diligence. During diligence, you will use the leases and other information provided by the Vendor w/r to the tenancies to compose estoppel certificates that you, or your agent, will take to each tenant to verify the information provided about their tenancy.
That said, it is not unusual to share copies of the leases *only* once there is an accepted LoI or APS and/or a confidentiality agreement in-place.
Here in Canada, the Vendor would not be permitted to share personal information of the Tenants (Birth date, SIN, etc) without their prior, informed consent.
I don't know about PA laws, but I think he is BSing you. When we buy properties w/ existing tenants, I require to see the existing lease, application and credit score. I also require to have it that they need to sign a new one-year lease with me as a contingency by closing. And most important, I need to see copies of payments for at lease 3 months. That means cancelled checks or bank receipts. Needless to say, I need to interview the tenant myself.
Unless it is coming from a property manager that I am currently dealing with and they can vouch for the seller and tenant. Otherwise, I know (STRONGLY think) that the seller has something to hide.
Tell him to jump in Harveys Lake.
leases show rent and you would know he's BSing! Good thing you walked away.
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