Inherited tenant signed lease after sellers agreement

[Rene Placido]

Hello All, I thought I’d give this a shot, first time posting on here. I recently signed and agreement to purchase a property the old landlord did not have any leases with the tenants as they were all family (property is a 4 unit) one tenant will be inherited and now has a lease with the old landlord for five yrs signed after I signed the sales contract that stated that I had to keep him there for one yr. is this valid? I live in Pa

[Erik W.]

Another vote for an estoppel letter.  I have seen Sellers do ultra-funky stuff with tenants after signing a sales agreement, and the estoppel letter basically says, "Here's the whole deal, and current land lord and tenant agree not to make any other deals."  That's how you get protected.  But the good news is if you purchase agreement calls for "review and approval of all leases" (basic, it should!), then you simply review the lease and if you like it, proceed.  If you don't like it refuse to approve that lease and tell the Seller he can fix it or find another Buyer.

Too, if the rent was set at some ridiculous amount or some other odd conditions (i.e. 99 year lease with no increases), I think you could argue in court that the Seller was committing economic "waste" of the property, and just like if they decided to rip out all the plumbing the day before you close, you could back out without penalty.  They can't make a major alteration to the value of the property and still expect you to go thru with it.  Courts may favor the Buyer over the Seller when shenanigans like this come into play.  But you should still always insist on estoppel letters and right to inspect and approve all active lease agreements, and insist that there are no "side" agreements other than what are disclosed to you for approval after the purchase contract is signed.