New leases upon ownership change?

Question

Hi team -

I am coming up on closing for a 4-plex in Fort Worth, TX in the first week of August, and in anticipation of the closing I wanted to get some feedback on whether it is customary/smart/typical to draw up new leases with the tenants?

My concerns are:

1 - There is currently a property management company called out on the current leases which I am NOT continuing with after closing.

2 - One of the tenants has a verbal agreement (according to estoppel) to pay rent on the 15th of each month.  Although this is signed on the estoppel, I want to get this in writing should anything start getting "funny".  I have no problem if he pays on the 15th so long as this is constant month-to-month.

My first reaction is, that I can handle the above concerns in the notice-of-ownership-change letter I send to the tenants...    the current leases are very solid and I would have no issue using the current terms and conditions that are laid out.  The property management language is really my main concern.

Thanks in advance for the input!

Adam

Jon Holdman · Answer

The leases almost certainly remain in place after the sale.  The estopple letters should be signed by the tenants, so that's your in-writing record of the terms.  If the leases are expiring, or month to month, you can then terminate or offer new leases, as long as you're in compliance with the lease and local laws.

Deborah Burian · Answer

Adam Roberts - it is likely that your purchase is "subject to" the existing leases in which case your best approach may be a letter advising of the new management.  If they are month-to-month leases, you may be able to notify and re-write if the letter isn't meeting your needs.  I'm dealing with this right now and for a variety of reasons will be re-doing all leases as terms come up.