I have a buyer on a rental property requesting the lease and other tenant documents prior to closing on the property, is this customary?
I’ve not had this before.
Absolutely. It is part of their due-diligence. I would want to know everything about the property, the tenants, leases, etc. You probably claimed the value of the property was based on income from rentals, etc., well you need to validate it. If I were the buyer, and you hesitated to provide the due diligence documents, I would walk away.
It is no different than a bank requesting W2's, employment verification, tax returns, etc, during the loan process.
Requesting a copy of the lease would be a reasonable request in my opinion. After all, as the buyer and potential new owner, they’d be inheriting the tenant and their lease. Makes sense to want to review it beforehand.
Not sure what you mean by “other tenant documents”. I personally wouldn’t turn over anything that had the tenant’s private/personal info on it (i.e. social security number, DOB, etc) prior to closing. The buyer doesn’t need that. A copy of the lease should be sufficient.
@Raymond Guzy Jeff is right. I wouldn't necessarily provide the document to any one, but if there is an offer it is part of the process. You should also be prepared to turn over the security deposits from the tenants at closing.
@Raymond Guzy Giving them the lease docs to review during the due diligence period is not abnormal at all.
When you say “tenant documents” do you mean background/credit checks completed during the application process? If so, you definitely do not want to supply them with those, there are laws that prohibit that. Just write up a summary for them if they are looking for that info.
Thanks for your guidance, didn’t want to get the other info, is this required after closing?
Thanks for all the replies, didn’t want to release any info that wasn’t part of the process, background/credit.......