This property I am purchasing - 2 family - already is fully occupied. The previous owner did not have them sign a lease. They are month to month.
Is there a way to go about presenting a lease for them to sign. Even at the very LEAST I would like them to sign some type of month to month agreement just so they are aware of guidelines that should be common sense but not everyone has that so any insight on how to handle would be much appreciated.
Thank you!
-Angeles
In most states - If there is currently a lease in place with a term (say the tenants are 4 months into a 1 year lease), that will convey over to you and you’ll have to honor their lease. That makes sense.
If the current tenants don’t have a lease (like your situation), you can draft up your own lease with your own rules and present it to them. They can either sign and abide by your rules or they can refuse and then you can evict them. Treat this situation like they’re your new tenants (they are) and tell them you will be presenting them a lease to sign. One thing I’ve done in the past with inherited tenants is just to put them on a month-to-month lease since they’ve already been there for awhile. You’re going about this the right way. They need to sign your agreement so they know and agree to abide by your rules.
Awesome! Thanks so much Justin!
Angeles,
Depending on where you are you may not want a lease. I’m in the northeast. I do a 1 year lease for new tenants and then go month to month from that point on. I have them sign a “house rules” document that outlines their use of the common areas, porches , parking etc. It is very hard to evict someone up here who has a lease for any other reason than non-payment of rent. When you buy a house, you are always inheriting “perfect” tenants. Sometimes that is the case, most often not. Within the first year, I usually have new tenants of my choosing. If you are looking for financing, your lender wants to see leases. If you don’t need financing, I wouldn’t do a lease, especially if you are not 100% sure of the character of your tenants. This is just what I do up here in the northeast. I would ask around at your local real-estate investors club and see what works in your area.
JP
Don’t complicate this or over-analyze things.
We’ve delivered new lease agreements to everyone in an apartment building we purchased offering them a “sign or resign” option. Most will sign, some will vacate, some will experience a meltdown and vacate, and some ignore everything. So, you just catch the ball on the rebound and make your shot as it comes to you. It’s all good.
You need to talk to a real estate lawyer if you can tell them to sign a lease or you will file an eviction. In my area, there isn’t such an eviction form on those grounds. That’s something you could only do in a commercial tenancy, not residential. If you’re threatening to evict someone for which there isn’t an eviction form, that can be construed as harassment and could be grounds for a rental abatement or damages.
It may not apply to your area, or if it does, you may have to present this in a different way like reducing the rent by $25 a month for the term of the lease if they follow all the rules of lease and pay rent on time. Seriously, check with a real estate lawyer first before threatening to evict a tenant if they don’t sign a lease so you don’t open yourself up to unnecessary financial problems down the road.
In the case we’re talking about, the tenant has no lease agreement, and our terms are not defined properly for our discussion.
An “eviction notice” is not the same as a “notice to vacate.”
An eviction notice assumes default by the tenant for any number of reasons. A notice to vacate is simply a notice that the landlord intends to take possession of the premises by ‘x’ date, regardless of the reason(s).
Meantime, again we’ve got no leases here. So, we just follow the law by giving the tenant a choice; “Sign up” or “Move out.” There’s nothing illegal about that, or unethical, or even unenforceable.
Now, if the tenant had a lease agreement, and it was for 3 years, or maybe 20 years, like a commercial lease can be… It’s going to take some negotiations if we want to change the terms, or cancel the lease. As landlords we’re in a weak position in these instances.
Back at the ranch, despite having no written lease, it’s still the right of either party to notify the other of their intention to either vacate, or take possession of the premises, respectively. But in neither case, are we talking about an “eviction.”
I feel better now.
In my area, if a tenant doesn’t have a lease, the normal landlord tenant act rules apply. You don’t need a lease to ensure the tenant lives in a reasonable fashion.
In my area, you can’t give a residential tenant a notice to vacate unless you’re doing major repairs to the unit, which means you have to submit plans and spend several thousand dollars to pull permits after as proof to get them out of there and plus a 120 day notice. You can’t just write you’ll be doing major repairs and not do it. You used to be able to give a tenant a notice to vacate if a family member where to move into the unit. They took that away. There are no other notices to vacate, just evictions for tenants who violate different sections of the landlord tenant act such as late rent, non-payment, unreasonable enjoyment, committing an illegal act, etc.
In my area, creating a paper trail of directing a tenant to do something a landlord doesn’t have a legal right to do is proof of harassment to a judge and can lead to damages. I have 32 apartments and been to court hundreds of time. To suggest you can do what you claim anywhere as a blanket statement is really bad advice. This person should check with his local real estate lawyer first as to what’s allowed in his area. Normally, they offer a free half hour initial consultation anyway to new clients, so really there’s nothing to lose by talking to one to get good legal advice.
As for commercial tenancies, I’ve had commercial tenants who were month to month and I wouldn’t let them sign longer term leases because 1) they were a new business and had little collateral that wouldn’t be collectable in court and 2) I would charge them double the rent for a long term lease and only gave them the rent so low because otherwise the commercial unit would have been vacant because the market was so volatile. But, when the market turns around, I expect to get higher rent and if they are a day late I’ll change the locks and they’re gone and I tell them that . Landlords do it all the time. Not all commercial leases have lease terms. Ideally, they should. In reality, it depends on whether it’s a hot or depressed real estate market.
wow! thanks for all the advice everyone! I am actually meeting with an attorney next week so I will ask him about this also. 
thanks again!
Hey… About this I would like you to consult to some of the real estate developer or expert that you feel can be available easily… You can grab help from him!!
Would you now.
A lease is important because it outlines behavioural conditions on the tenant and frames the agreement the two of you have with each other.
I have month to month leases as some of my properties and year leases at others. It’s up to you which you pick, but a lease is mandatory, IMHO. He can sign it or leave. If he gives you trouble about signing it you didn’t want him there anyway.
As the new owner of the property you are able to present whatever you like to the tenants however it is ultimately up to the tenants as to whether or not they will accept the new terms. In presenting the tenants with a new lease you should seek to reduce the rent in order to get them to commit to a longer term. If they are unwilling to sign up for a longer term than put together a month to month agreement outlining how they need to provide notice that they will no longer be occupying the units. Anything you present or discuss with them be sure to have it in writing and signed by the tenants otherwise it may not be legally valid.
Wouldn’t it be more profitable to offer the tenant the same rent he’s paying now ‘if’ he signs a lease, rather than offer a discount? This assumes the monthly rents are already at market value. Well, I would never want to buy income property where the rents were already retail priced. Otherwise, where’s the upside…?
Notwithstanding, I would rather gouge my eyes out with a rusty melon-baller than reduce rents (would it really make any difference if it was ‘rusty’ or not, just asking).
Rather I would simply offer the same rent on either a lease, or month-to-month rental agreement, depending on which one I wanted the tenants to sign.
If the market won’t bear the higher rent on my ‘less attractive option’, I’ve lost nothing, except that those who won’t sign the agreement will have to move, and now I’ll ‘have to’ re-rent the unit at market price to a new renter whose also willing to sign the ‘more attractive option’ I’m offering.
Of course the overall success in this scheme assumes we’ve actually collected adequately motivating security deposits, that the evacuating tenant will scramble to get returned, and consequently not tear the crap out of the unit on his way out, and all things are equal. :biggrin
Yay!
When I see rental units for sale with tenants that are good deals, it’s generally due to retiring landlords. (Which I don’t understand because my idea of retiring as a landlord is hiring a property manager, do nothing and get paid for it) I digress. Generally the retiring landlords were charging lower than market rent.
Generally I keep the rate the same: Renting fo a year at slightly below market is better than filling a vacancy. Then the next year, after doing repairs and maintenance, I adjust to market rate.
Funny, this is my strategy as well. Lots of people don’t like this way, I see it as a big reason I invest in real estate.