Buying an occupied property with no leases

[Benjamin Branson]

I'm buying a property out of state. The current owner has no lease with the current tenants. He has done no background check, no credit check. He manages the property himself and collects rent in person. The tenants the owner claims is "Month to Month." How do I protect myself making an offer on this house so that I do not buy an eviction and not know it? Is there a way I can make an offer contingent that the current tenants pass "minimum qualification standards" and sign a lease with me? Has anyone encountered this before?

[Nathan Gesner]

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.