Just closed on our 4-plex about a week or so ago. There were already tenants occupying each unit so we just took over as the new owners keeping the old leases in place.

A few days ago we got an email saying one of the tenants up and left. In the email our prop management stated that the tenant informed the previous seller. Hmmmm? Something kind of weird going on it seems.

Is there any sort of action we should be taking against the tenant? Is it even worth it if we are out of state investors?

Looking further the leases from the previous owner didn’t have any clause saying there would be any recourse if tenants broke their leases.

Would love to know if there was a step maybe we missed?

Thanks!

Greetings @LaRussa Henderson ,

I would look at it as an opportunity to renovate unit, raise rents, and get a tenant in the unit that meets YOUR standards.

I wish you the best!

Originally posted by @Eric H. :

Greetings @LaRussa Henderson ,

I would look at it as an opportunity to renovate unit, raise rents, and get a tenant in the unit that meets YOUR standards.

I wish you the best!

Ditto...we did exactly that on a 4-unit as each inherited Gem of a tenant moved out. 

Some rehab & rents increased 50-80%.

This year we bought a 3-unit & the seller @ the close intimated that he was afraid we'd evict his LONG-TERM LOW RENT tenants. But they simply just left when we took over. BONUS!!!!

You never 'marry' a building or tenants!!!

Always remember it doesn’t matter how nice you were how cheap the rent is or what breaks you gave them ...Tenants will bail on you at any time it’s convienant for them . Never forget this fact 

I agree with Eric H (and the others), use this as an opportunity to find new tenants and get the place rented at market value.  Also find out what happened to the security deposit in case you need to repair some damages.

Good riddance. Either someone forgot to tell you or the tenant was going to be a problem. Either way, move on and get it filled again.

In the future, your offer to purchase should include a requirement that they 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: https://eforms.com/rental/esto...

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.

@LaRussa Henderson Whenever I buy a property already occupied ( unless govt ) I always get 3 months rent from the seller held by the title co. As the tenants pay ,it gets released back to the seller.. This provides a bit of a cushion to head off off any issues... On the other side, when I sell a property occupied I give the buyer a 3 month rent credit on the HUD, and I keep the 3 months. Provides a warm a fuzzy feeling for my clients,

BTW you should not be involved with this , your team out of state should be handling all. This is 100% on them. They should have met with the tenants and got a feel for them. Though nothing is 100% , 

All the best, 

If there's a lease in place, then you theoretically could go after them for the money for the time it takes you to rent it.  But I agree, let them go, rehab, and rent at higher rate.

@LaRussa Henderson did they transfer security deposit? Did you get pro-rated rent for December for all four tenants? 

If the tenant had a lease term, then you can pursue them for rents owed. You don't need special language in a lease beyond "term is X to X". Whether it is worth it to pursue with the tenant is another matter. You may get one month of rent at best, which probably equals the security deposit.

If the previous owner was aware the tenant was breaking lease and didn't disclose that, you could pursue them for damages. Damages are likely limited to a month of rent and leasing fee. 

You won't get the full lease term from anyone. Your best bet is work quickly to fill the property.

Don't fear losing tenants or vacancy. It is just part of the business. All efforts should be focused on turning the property quickly and getting a new tenant in place. 

Its not uncommon for tenants that want to move to use the sale of the building as the opportunity to disappear.

@Nathan G.

Dude thank you for this knowlege.

Great usefull info!

@LaRussa Henderson This might be a blessing in disguise. I inherited a tenant when I purchased my duplex and it’s a tenant from hell. She does drugs and break things. She smashed all my windows every few months or so. Tons of money spent in repairs and eviction.

With this tenant of yours leaving, it is a good opportunity for you to inspect the place, renovate, vent out bad potential tenants, and may be able to rent it out for a higher price.

@Eric H.

Thank you! Agreed

@Pat L.

Yeah we think it will be for the better as well. Thank you!

@Dennis M.

100% agree. Cut our losses and do what’s needed to raise rents. Thanks!

@Theresa Harris

Yeah they aren’t getting their security deposit back that’s for sure. Thanks!

@Nathan G.

Can’t thank you enough for this @Nathan G. This will be a huge help for us in the future. Thanks!

@LaRussa Henderson

It's common for tenet turn over when a priory changes hand. I bout a 4 unit in 2018 and everyone left. Last spring I bought a 3 unit and one left.

This creates a great opportunity to update the apartment and increase rents. You can also look for tenets that meet your criteria versus the previous owner.

Don't let this fret you, there are always silver linings in real estate deals, no matter which way they go

Look at it as a blessing indeed.  I took over 23 new units this summer and about half of them have had turnover.  Which allowed me to renovate to my liking and get market rents in those units.  

Don't step over dollars to make pennies, think long term here...

Odds are they probably weren't a good tenant anyway.  Look at this as an opportunity to renovate the unit and get it rented.  Sometimes when you inherit tenants they can be a huge pain or they stay a long time which keeps you from renovating it.

Wait. Did I miss some information here? I don't see where the tenant broke the lease. And according to the OP, they "up and left". Well, no, not if they were on a MTM lease. It sounds like the tenant gave notice to the seller prior to close, and left according to said notice. I'm missing some info here to blame the tenant for anything. Now, the seller on the other hand...they were not forthcoming with all the information they should have been.