Missouri purchase of rented multifamily - lease changes?

Question

Helping a client buy an occupied multifamily and he may want to change some things about leases after close.  I've never actually done this, always just rode the leases out and then renewed on my own contract, primarily I assumed I had to.  So, questions:

- Must the current leases be honored in exact terms? (not wanting to kick anyone out, but may want to adjust policies)

- If someone is in a unit on a lease that expired a long time ago, I assume we can put them on a new lease after close assuming they don't elect to move out.

- Even if we didn't change policies or terms, can we update the existing leases to the buyers preferred contract if the basic tenant cost and amenities, etc don't change?

General boundaries and guidelines with leases after close would be appreciated.  I can't seem to find information in the missouri statutes, must not be using the right words!!

Maggie L. · Answer

This really sounds like a question for a lawyer, given variation in state and local laws.  My initial, not a lawyer and unable to give legal advice, thoughts were as follows.

Depending on the original lease - what does it say happens at expiration - the lease may have moved to month to month and it should be fairly straightforward to put the person with an expired lease onto a new lease (see pages 8 and 9).

https://www.ago.mo.gov/docs/default-source/publica...

For the tenants with a current written and signed lease in place there's also the option of asking the tenants if they're comfortable with a new lease agreement.  Assuming this client wants to keep the tenants around, it seems like the best thing to try.  The tenants have more certainly that they're not about to be forced to move, and the landlord has the desired lease agreement in place.  Mutually agreed-to changes happen all the time.

Account Closed · Answer

1) Yes.  The contract is assumed as-is, and must be honored as-is.

2) If the lease ended, and they've been paying rent every month without a new contract being written, what they now have is a month to month agreement, most likely based on the original terms, except that it's M2M now, instead of a 12 month lease.  Some states say that when the contract expires, that even the terms expire, and then the M2M contract is simply under state laws.  I'm thinking Oregon does this.

But, regardless, you can just give the proper notice of any changes you want now.  You also need to look at state laws regarding notice amount, depending on what you want to change.  For instance, in CA, if a landlord wants to end a tenancy, and the tenant has been there over a year, the notice must be 60 days.

What you can do with the M2M tenant, is give notice that they will be required to sign a new agreement by x-date, or move out by x-date.  Or you can just give them a 30 day notice of a new set of rules.  If you do this, you don't need them to sign anything.

3) Nope.  You can't change the original contract, unless the tenant agrees.

What you can do, though is offer the tenants incentives to sign, if it's important.  They'll be nervous about getting a new landlord, so if it can look like they're getting something in exchange for what the new owner wants, they'll be easier to deal with.

For instance, "We know that you are not under any obligation to sign a new lease.  However, the new owner would prefer using his contract.  Therefore, as an incentive, if you sign the enclosed new lease, you will be given a $100 rent credit off next month's rent.  Of course, you are under no obligation to accept this incentive and sign the new lease, but we are hoping that you will agree to do so."  Something like that.  Money talks with tenants.  Unless the new contract is really obnoxious, they should go for it.  I suggest you don't let the new owner try to weasel and offer some measly amount. $100 is a respectable amount and they won't feel insulted or ornery with that offer, in my opinion.  :-)