Existing Tenants What To Know

[Patrick Q.]

Hello All,

I am in attorney review on a property.

There are existing tenants with a lease expiring 3/31/21.

I am told that the existing tenants are currently looking for a new place and will be moving (no move date was provided).

I have a copy of their lease, it seems to be in order and a decent lease.

I wanted the property delivered vacant as part of the deal, so I could vet and choose my own tenant.

Delivering it vacant is not something the seller can commit to because we are in NJ and also the pandemic (the tenants are entitled to renewal).

I have asked for the following seen as though the property cannot be delivered vacant;

-A copy of the current lease (I received this).

-12 months of trailing rent payment documentation proving that the rent was paid by the tenant, in full and on time.

I am considering requesting an Estoppel letter documenting all of the details that would be signed by both the tenant and the seller.

I feel like the decision to take the property will come down to if I am willing to take the existing tenant or not. 

Has anybody got any advice to offer as to how I might further protect myself or actions I might take in this situation.

I like the property and it is a solid investment in my opinion.

Thanks in advance for any advice you guys can offer.

[Will Fraser]

Hi @Patrick Q., in general if they are paid up and you are aware of their full lease terms (Estoppel agreement AND reviewing current leases) then you could be walking into a navigable situation right now (with the building mostly occupied) AND have your back-end option of improving the units and choosing your own tenants.

The downside that exists with this would be getting a bad tenant, but so long as they are paid up and everyone is clear on what their lease says everyone should be doing and they are doing that, then that headache may be a small price to pay.  

If court records are public in NJ I might recommend running their names through the system and seeing if there have been any undisclosed tiffs between the seller and the tenant that pop up.