Non-Renewal of Lease - Inherited Tenant & New Landlord

5 Replies

Hi Everyone!

I am currently in the process of buying my first property -- a duplex! It is fully rented, I am inheriting tenants (I know...), but I am not too worried about that for a few different reasons. 

Anyway, I am buying this to owner occupy. The leases expire next June, and in order for the bank to underwrite the an owner-occupied loan I need to move in when the lease expires. I have to sign an intent to occupy the property (no big deal) and also.........give a notice of non-renewal of lease to the side I am to occupy, which the tenants must sign. The worst part is that they just moved in two weeks ago...so I feel a little bad giving them the notice literally two weeks after they moved in -.-

This makes me a little nervous! Also it brings the following questions for those of you with more experience :)

  • They are not my tenants yet, so how should I give this notice, knowing they will still be my tenants for another 7 months? 
    • I don't want to be the mean new landlord who bought the property and doesn't care at all...should the current landlord to give this notice and get it signed? After I take over I'll be introducing myself to them anyway, at which point if necessary I can explain why the lease wasn't renewed. 
    • Should I ask to meet the tenants before closing to get the document signed? I keep going back and forth as to whether this is a terrible idea or not lol. 
  • Also...what kind of notice should I give them? Should this just be a standard, vanilla "This formal notice....blah blah...I will not be renewing our Lease Agreement...sincerely, landlord", or should it just be a "I, <tenant sign here>, have been notified that the Lease Agreement will not be renewed and will vacate the property by xxxx, 2018"

Am I just really overthinking this? How would you go about the situation? 

You should handle it yourself, you should wait until it closes if the timeline allows, and just explain the situation.  You'll need to get a lease in your name, provide whatever paperwork the bank needs, and wait until closer to the end of the lease to give formal notice.  Hopefully since they moved in while the property was for save they won't be too shocked.

This doesn't make sense that a bank or money lender wants you to terminate a tenant when the unit is occupied. There is no credit history yet on these people to deem them unqualified to still live there.  UNLESS there is something?  

Another thing is no matter what, you have to adhere to their lease agreement and these tenants are allowed to stay until the lease expires, or for non-payment of rent, or for something they have done bad. 

You could run a credit check on these people to qualify them again for you and show the bank or money lender that they are Collectible and qualify as tenants. Or show them the credit report the former Landlord ran on them. 

But one thing for sure, that telling these people they have to move in 7 months when they just moved in without just cause for termination is going to bite you in the rump. 

Are they on a month to month rental agreement?  Or an Annual rental agreement?  

Something just doesn't sound right to me here. 

Nancy Neville

When you introduce yourself tell them yourself in person. apologize somewhat profusely and tell them it is the bank requirement of the loan (non-negotiable). Tell them you wanted to give them as much advance notice as possible but that also you look forward to a pleasant working relationship, etc and to let you know if they need anything. Exchange phone numbers etc. You also may want to give the non-renewal a reason for them vs other side. That is the hard one. Maybe first ask if either plans to move. If not, choose the tenant with least seniority...if that is the unit you want to live in. Good luck and remember, you sign a 1 year lease and you are guaranteed 1 year only.

@Michele Fischer I have to get it signed prior to close as it is a condition of the owner occupied loan for my bank. Unfortunately it wasn't for sale this is an off-market deal so I am not sure what the current owner has told them and what he hasn't.


@Nancy Neville I think that sounds like a good idea, I do like the note about the seniority as the other tenant on the other side has been there for a few years. It also happens the newer tenants are in the unit I want to occupy, so that works out. I am currently planning on letting the other side stay, although I will obtain all the records of the previous landlord from the application process.

I really was just torn at the idea of bringing bad news during my first meeting with the tenants of my first property...I think you are right that it will work better to give the notice and then when I meet them after closing I can explain the situation and do the introduction and everything. I'm actually going to see if I can use a piece of the bank's stationery to print out the notice on, that way it looks like the notice is coming more from the bank and it keeps both me and the current landlord from having to be the "bad guys".

How urgent are you to move in? Maybe you could help them find a new place and pay them to leave?

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