I am purchasing a condo in San Diego county that has existing tenants. They are about six months into a two year lease. What is the correct process for transferring the lease? i.e. Do I need to draw up a new lease between me and the tenants with the same terms? Can the existing lease be transferred? Need help.
Out here, residential leases "run with the land" and would remain in place, regardless if the property is sold or transferred to another owner. I'm not a lawyer and do not have a license to practice law or real estate in California so it would be best to run such questions by a legal professional.
Thanks for you input Bob.
I know I have to honor the lease with it's existing terms but I am just trying to figure out what paperwork is required, if any. Is there anybody in California that has been through this and can advise?
You have to honor the existing lease. If you are good with it, do nothing. If you want to change something, draw up a new lease. The tenants do not have to sign it if they don't like the changes.
You normally have the tenants sign an estoppel contract so the tenant knows you are the new landlord and to pay you instead of the old landlord. Your agent will know the process and how to draft this form, this is a standard step right before close of escrow for tenant-occupied properties.
As others have stated, legally you must honor the terms of their old lease. A new lease agreement is not required. The estoppel protects you from the tenant claiming they didn't know that you are the new landlord and that they have to pay you.
That is what I needed. Thank you Max!
@Jamie Powers , the estoppel will be a document you sign at closing.
The leases get assigned (via an Assignment) from prior owner to the new owner. This gets followed up with letters to the tenants advising of the change.
This is NOT handled via the tenant estoppel letter. That process confirms the lease terms, that it is in effect, there are no defaults, the deposit has been made, etc. and should be part of the due diligence.