Advice: Newly Purchased Home with Apartment (and tenant) Included

5 Replies

I've recently purchased a home (that I intend to live in), and it includes a one-bedroom apartment above the detached garage.  The apartment currently has a tenant.  This tenant is a co-worker of the current seller, they do not have a contract, and the tenant has not paid a security deposit.  It's simply a verbal agreement between both parties.  The seller communicates that the tenant is very dependable and has never missed a rent payment.  The tenant would like to continue renting the apartment.

This is the first time my husband and I will be landlords.  My husband and I are in the process of writing up a rental agreement.  We will definitely be asking for a security deposit.  We have met the tenant and confirmed employment.   

Any words of wisdom out there?  Anything to watch out for?

Have you already bought the house?  

If not - you'll want a lease before closing.  Without a written lease (can be month to month), a tenant can claim anything and you're opening yourself up to dispute.  The lease should outline the lack of deposit as well. 

If you already closed and they're now your tenants - then get them to sign a lease immediately - and be very, very nice until all the paperwork is in.  

IMO waiting to get a lease signed until after close is a mistake.  The lease transfers with the property, so it provides you protection.  

If you wait, you can ask for a deposit but who knows if you'll get one.  

I would never accept a property with a tenant without any written proof of the terms to their tenancy.  It's a potential disaster. 

If you're determined to wait, and just looking for advice on writing up the lease or how much to ask for a deposit, my only advice is to talk to a real estate lawyer.  


Don't wait until after closing to resolve this.  You should require an estoppel certificate from the tenant BEFORE closing so that you know exactly what the terms/conditions are of their agreement with the current landlord, especially since it's not a written agreement. If you don't get this document now, the tenant can later claim the agreement is whatever they want and you have no real way to disprove it. 

@Jennifer McElwee

Jennifer filter some of this noise in the thread.  Transactions like this, inheriting tenants, happen every single day.  Build a relationship with the tenant and have them sign a new lease.  It doesn't need to be any more complicated than that.  If you get a vibe that the tenant is good and property is being cared for... then I wouldn't shake the tree wanting a deposit.  If you think and plan for good things then mostly likely gratitude will be returned.  I would give the tenant a welcome gift, just because you will be living next to them.  They will feed off you positive vibration.


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