Transfer of tenants after sale

[Sean Connolly]

Hey BP,

Currently under contract for a 3 family. When being shown the property, I was told one tenant had a 6month lease for 750. The other (Sellers son) was on a month to month lease for 550, family discount I assume. I was just given the paperwork that the sellers son signed a 12month lease at 575. I was planning on raising his rent to 750 because that is what its worth. Am I in any way bound to their lease agreement? Thanks in advance.

[Shaun Reilly]

Originally posted by @Sean Connolly:

Thanks @Michael C.

Any massachusetts landlords, lawyers have any input? Or anyone running into this before? I feel like this was a very sleezy way to get their son an extremely low rent for a year.

If there is a valid lease you have to honor it. No ifs, ands or buts about it. However if they misrepresented what the leases were at the time of the contract you can certainly call shenanigans and back out of the deal or ask for a price adjustment.

I'd say that since you had planned on getting $750 for the unit but they locked in the rent, after agreeing to sell, at $575 you are out $175/month or $2,100 for that year. Ask for a price reduction equal to the cash out of pocket it will cost you. For example if you are putting 20% down then you'd ask for a $10,500 price reduction since that is how much less you would have to pay to reduce your down payment by $2,100. Hopefully you aren't doing a 3.5% FHA loan since that would be a $60,000 reduction. :)