Existing lease or create a new one?

Question

Hello, I will be closing on my first single family rental in 6 weeks and this will be my first experience being a landlord.

The existing tenant has been there for 4 years and currently has a month to month with the existing owner. The tenant wants to stay and I would like her to as well. My question is, should I make up my own new lease and have her sign or do I just assume the lease that is already in place. Nothing would change in the contract except for my name being on it. The terms and conditions would remain the same. Also, is it necessary to do a background check or should I trust the words from the Seller?  Thank you.

Patrick Page · Answer

We always like to update leases and since this is month-to-month it could be a good idea to have this tenant sign a new lease. If it were not a month-to-month you would have to honor the existing lease until the end of the leasing term. As @Karl B. said there might be things you want to include that aren't on the current lease and this is a good way to ensure the lease is up to your standards. If there are issues the lease is what you can use to enforce who is responsible for what. I agree with @Nathan G. you do need to let the tenant know that you are the new landlord and give them your contact info in case of maintenance issues, etc. Also make sure to collect the security deposit when you go to settle and make sure there is documentation of this. Once you have the security deposit in your possession you must let the tenant know that you are now holding onto it. Congrats on the new property and welcome to being a landlord!

Krista Snell · Answer

@Karl B. Thank you.

Krista Snell · Answer

@Nathan G. good idea. Thank you

Krista Snell · Answer

@Mason Hickman...thank you..very helpful advice.

Karl B. · Answer

I've learned to sign M2M tenants onto a new lease. Even if their previous lease is the same as mine (mine is from the local apartment association and a lot of local landlords use it) I also have additional items listed that aren't in the original lease (one example being drain and toilet clogs are the responsibility of the tenant).

Nathan Gesner · Answer

If you are keeping all the same terms, you can keep the current lease. However, you should give the tenant something in writing that explains you are the new owner, how they should pay rent, how they can communicate with you, and that all the terms of the existing lease remain in effect and continue on a month-to-month basis.

Mason Hickman · Answer

@Krista Snell

If you're going to be keeping all the same terms, there is not much point in signing a new lease unless you are trying to lock them into a longer term.

Regarding the current tenant, ask for the background check and application as part of your due diligence. In addition, ask for the bank records showing the consistent deposit history of the tenant. You don't want to be buying someone else's problem.