Buying a Property with Tenant in Place but No Lease

4 Replies

I am closing on a property at the end of the month, and there is a tenant in there that has been there for 3 years. The original lease has since expired, and there was no written provision that the lease automatically becomes a month-to-month, so they are currently a tenant-at-will. They have been paying every month and are never late, but there just is nothing written. I am planning on flipping this home and not keeping it as a rental, and am getting it at a great price. The seller also does not want the tenant to know that they are selling it, so getting a new lease signed prior to closing is out of the question. Would you close on a property and then just give them a 60 day notice upon closing? 

@Mark Phillips

Hi Mark! 

Well to be clear, there wasn't a written extension of the lease (or provision made) but yes, you're right they are now a tenant -at -will. It's great they are never late on payments, and have simply remained making on time payments over this period. 

It's going to come down to a few things here, what you're legally bound to do, what is the right thing to do, and what you're most comfortable with. 

I would have concerns as to why the current owner isn't' wanting to disclose this fact to the renters. It would seem obvious that they want to have rent coming in all this time (until selling) but it's not ideal maybe to go about it that way and not let people/persons who have made on time payments each month in the dark about needing to find a new home soon- they may scramble too to find a way to drag it out (see below).

The legalities of this seem muddy too because technically without the specification of month to month provisions in the original term of the contract, it seems like the original terms of the contact would still apply and in GA (just based on where your bio said you're from!) that would include (possibly if stated in original contract) first right of refusal. 

Meaning some of the items clearly outlined in the original lease contract do still apply, even for a tenancy- at- will. I.e. monthly rental amount set at X amount over three years ago has stayed as an unwritten, yet mutually agreed upon by both parties term of the contract by both parties as without, these tenants would not have been paying ang a tenancy at sufferance situation would be transpiring. 

My point is that the the current tenants may or may not have first right of refusal, however if written in their original contract technically it could be legally binding, and it could end up in court. (long shot I realize, yet not entirely out of the realm of possibilities) 

It seems maybe not in your best interest to not speak with the seller and ask why they don't desire to disclose this information and at the very least, ask to see the original lease agreement. 

Personally, I would consider asking them to move prior to closing and offer cash for keys- two months rent is going to be cheaper than holding costs in most cases (especially if financing deal), and by having this in writing (after the evidence of first rights not applying) I would feel better about avoiding the very idea of moving into a tenancy at suffrage situation. Plus, you've given them two months rent (security deposit and first month for new place) and can get into rehab sooner!

Post purchase, 60 days in writing to vacate the property is what is common place for terms in most cases- but again, seeing the original contract would let you know for sure. 

Hope this helps!

I would basically just close on the property, go knock on the door and say hey, I’m the new owner, we’re planning on doing a renovation and re-selling it, how soon can you move out? And then work with them to get about amicably, rather than evicting them, If you can. Depending on the kind of tenant, if they pay their bill every month then they should move out as long as you give them a reasonable amount of time to move out.