Purchasing a rental property with an acquired tenant can be a wonderful experience, where you’ll benefit from instant cash flow without having to find and place a tenant. It can also be scary, as you wonder whether you’ll be walking into one headache after another. As you consider buying a rental property with an inherited tenant, these are some questions that you may be thinking of:
- Should I keep the tenant?
- Can I instantly raise rent on an under market tenant?
- Do I have to fulfill their lease?
- Can I make changes to their lease?
- What paperwork should I send to the inherited tenant when I take ownership?
Every state has their own laws, rules, and regulations. According to Massachusetts laws, once the new owner take over who just bought the property, the new owner must honor all the tenant’s remaining lease’s terms as well as terms & conditions written / disclosed on their leases.
The new owner cannot ask the tenants to leave because, he/she just bought the property. If, for any reason, an eviction process has been started, even then the new owner must wait for the court decision and follow all the rules and regulations set forth by the state / town.
Moreover, if the tenant(s) has/have no lease and not paying the rent, then the new owner can evict them and all laws, rules and regulations set forth by the state / town, must be followed.
The new owner cannot instantly raise the rent. They must honor the current lease’s terms & conditions, until they expire. Once the lease expires, then the owner can raise the rent but, the tenant must agree to the new rent as well as to the other terms and conditions set forth in the new lease.
The new owner must fulfill every tenant’s current lease’s terms and condition until they expire. No exceptions.
The new owner cannot make any changes to any current lease until they expire. No exception.
Before buying a rental property, a buyer can ask the seller to provide:
- The copies of all the leases.
- The proof of any employment verification(s) was/were done before renting or not.
- The proof that all the tenant(s) are paying rent on time (copy of a rent check, bank statement for any direct deposit, etc. can verify if tenants are paying rent on time).
- The rent of each unit the current tenant is paying (should match with the amount on rent check paid for the rent and the amount written on the lease).
- Any other terms and conditions (i.e., heat, water, hot water included in rent or not, gas and/or electricity included in rent or not, parking space if there is any, who is responsible for cleaning the snow, trash policies, etc.) written on their leases.
Please note, you must collect as many proofs as are available, and they must be in written, verbal promises are not enforceable in courts, especially housing contracts.