Inheriting Tenants- No proof of lease, verbal agreement only

[Jacob Haskins]

Hello BP community!

Tomorrow I am slated to close on a duplex, and I will inherit tenants.  The seller has stated they do not have any paper leases, as everything is verbal.  The tenants are long-term (about 10+ years), and he just drives to the property and collects a rent check every month.  The seller has never raised rents in the 10+ years he has owned it.  I know what they currently pay, but I know nothing else in regards to security deposit or anything.  The closing company was supposed to receive said "leases" so they could prorate the rent and credit the security deposits to me at closing, but they (of course) call me the day before and gave me this news.

I will be asking tenant A to move out because the unit is trashed, and it will need to be rehabbed/updated so I can get market rent (around $1250).  As far as tenant B, I was just planning to get them to fill out an application and sign a month-to-month lease after closing.  The plan is to increase their rent from $750 to around $1100 (if their application looks good), which would still be below market rent but fair since their unit is in good shape, just outdated.  The thought behind doing Tenant B in a month-to-month is that I will not be locked in to having that other unit below market rent, and I can have flexibility around that unit if we needed them to get out for renovations as well.  I know Tenant B might not agree to the new lease (which would be fine) as we have built in a "holding period" into our analysis if they decide to leave.  

I want to hear from the BP community around this situation. Is it necessary to get an estoppel since I am planning to get Tenant A out, and then asking Tenant B to sign a lease?  Should I fear that the tenants may "squat" if I do not get a new lease/estoppel?