I am currently in the attorney review period buying a 2-flat in Chicago. My attorney demanded the bottom unit be vacant by closing as seller had given 30 day notice to a month to month tenant when it was put on the market. The seller's attorney letter stated the following:
There was no security deposit
Tenant ceased paying a few months ago
They cannot find the lease but " (it) expired long ago and the tenants are month to month."
"The first floor tenant has been properly served with a 30-day notice to quit the premises, and the time has elapsed. An eviction has not yet been filed"
I plan to:
Ensure there was never a security deposit. If there truly never was one I want to offer the tenant cash for keys.
Is there a legal document I need to have the tenant sign when they leave the premise? If so can I deal with the tenant directly before closing?
Also, the second floor lease was also "lost" and expired. Can I provide this tenant with a new lease before closing? They currently use CHAC. Do I need an inspection or anything else to continue receiving the voucher?
Thanks for the help!
"Do I need an inspection or anything else to continue receiving the voucher?"
No. Not for a change of ownership. They will schedule their annual inspection as normal when the time comes. Could be a month after you close...could be 11months after you close. Depends on when they did the last annual.
But what you do need to do is contact CHA right after you close and inform them of the new ownership. They will put a hold on the rent payments. Then you need to furnish them with your paperwork, proof of ownership etc and your bank info in order to get an account with them and start receiving rent payments. That can take a while as they ask for a lot of paperwork and details. But when they do start sending payments to you they will retro it back to when you took ownership.
Hope that helps.
@Connor O'Brien it doesn't matter if there was a deposit or not. You should not buy the property until the tenant is completely out and you have verified this. Why on earth would you inherit a tenant that is months behind on rent and then offer him cash to leave?
The seller needs to evict the tenant legally and hand it over to you vacant. That's the only option you should consider.
As for the upper unit, you should contact CHAC and verify the requirements. I highly recommend you contact them now instead of waiting until closing! I don't think CHAC will make payments without a current lease agreement so you can ask if they have a copy of it. If not, you will likely have to draw up a new one. They will definitely need your information to provide payments and you will have to meet deadlines to ensure everything is set up in time to receive the first payment. I'm not familiar with your state but I don't think they will require a new contract because contracts transfer with the sale of the home.
I do highly recommend an estoppel certificate. What is it? I'm glad you asked!
Your offer to purchase should include a requirement that Seller provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel certificate is a form filled out by the tenant and then confirmed by the Landlord. It's supposed to ensure there are no surprises after closing. For example, you buy the place and the tenant could claim the Seller allowed them to paint the walls black or that their security deposit was twice what the Seller claimed. How will you know? An estoppel certificate fixes this problem.
Some things it may include:
1. Tenant name, contact information, and address
2. Occupancy date
3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate
4. Are there any modifications to the written lease?
5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?
6. Current lease term (expiration date, month-to-month)
7. Current rent rate
8. Rent due date
9. Security deposit amount
You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchange "doc" with "pdf" for more options.
Here is an example and explanation: CLICK HERE
Some have a lot of legal jargon but this document does not need to be so detailed. This is an important tool for anyone buying a tenant-occupied property.
You seem to be second guessing yourself and your attorney here. You wrote.
"My attorney demanded the bottom unit be vacant by closing"
Then further down you wrote that you plan to ensure there is no Sec Dep, offer cash for keys, contact the tenant before closing
Stick with what your attorney has demanded that the bottom unit be vacant and you don't have to worry about any of that.
Tenants aren't paying, tenants ignored the 30 notice, leases are all "lost" too many headaches here man. Follow your attorney's advice and take the unit empty. Trust me...he's looking out for you based on the details that you have shared.
And ditto everything that @Nathan G. said. Great post.
@Nathan G. @Ronan M. Thanks for the great advice!
I will ask my attorney to push back on the bottom unit being vacant!
I am second guessing myself because the bottom unit tenant has a leak in the bathroom that is causing damage to floor/joists. And has also attracted termites (I'm confident that termites are a recent problem). I want to get in and repair leak/treat mites ASAP. I know that waiting for eviction will lengthen the process.
Thanks again for the help!
Updated 13 days ago
Just got affidavit from manager saying no security deposit was existed. @Nathan g. If deal was good enough would you consider taking a property with a tenantundergoing eviction and if so how much would you budget? Thanks again
Updated 13 days ago
I'm buying property as my primary residence in a convenient location otherwise I would have already walked
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