New lease when buying a tenant occupied rental?

Question

I just bought a Duplex and at the closing the Agent said I had to provide the tenants with a new lease. I researched this before, and thought that the current lease would be in effect till the end date. What do I have to do?

It's in Baton Rouge, Louisiana

Bob Norton · Answer

@Ryan Nodurft In Louisiana, if the tenants did not record the lease, then you can cancel their lease when you buy the property.  Most residential tenants do not record their leases.  However, you should get copies of the leases and review them as part of your due diligence to see whether or not you agree with the terms.  I think you will still need to give the tenants a notice that the lease terms will be changing if you require them to sign a new lease.  You can honor the existing leases if the terms are acceptable to you, but remember that the leases were between the tenants and the former owner, so if you choose to keep the existing leases, you should consider getting them to sign an addendum that you are the new owner with new payments instructions and that all the other terms will remain in effect until the expiration of the lease.

Jake Culler · Answer

Yes I would make a new lease unless the current lease is sufficient. Then you could just copy that lease and have your name/signature on it.

I bought a fourplex last year and kept the same lease and just used the same terms and my signature/name. I didn’t notice there was not a rule against no smoking and had to smell cigarettes through the wall until her lease expired.

Robert Beaman · Answer

As mentioned before, if it is not recorded with a clerk-of-court, the lease is not legally binding. However, if you wanted to get out of the lease in place, the tenants could retroactively file the lease with a clerk-of-court, therefore making it legally binding. It seems that the ball is really in the tenants court. If they are okay with a new lease I would do a short-term probationary type lease.

Bob Norton · Answer

@Ryan Nodurft You're welcome!  As for the BP lease, make sure you have a Louisiana attorney review it. You could check out the website for Northshore REIA, we had a property manager speak back in Feb 2019 and his sample documents, including his lease, are available on the website.

Michael Noto · Answer

I would highly recommend test driving the tenants before commiting to them for any longer of a term than you have to. Take 2-3 months at least and see if they pay on time and are otherwise good to deal with and take it from there.

Ryan Nodurft · Answer

@Bob Norton

Hey Bob! Didn't realize you were on here!

Thanks for that information. The current lease seems ok. But, I'll probably bI am planning to use the BP lease made for Louisiana.

Ryan Nodurft · Answer

@Tim Desselles

Yeah, that would be my preference as well. But I thought that the current lease is in effect till they break it, or it runs out. I didn't think I had the right to throw the old lease out because I bought the property.

Tim Desselles · Answer

I would get them under a new lease regardless of if you have to or not, so that it has your/your company's name on it.

New lease when buying a tenant occupied rental?

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