Inheriting Tenants and Issuing Notice To Vacate

[James M.]

Hey Guys and Gals,

Long time reader and first time poster here at Bigger Pockets. I have learned a ton reading from all of your experiences, and for that, I thank you. After tons of saving, reading, and researching, I am finally in escrow on a duplex (2 on 1) in Long Beach, Ca. With that being said, this is my first investment property, and look forward to the journey.

I read the Book on Managing Rental Properties by Tuner and Tuner and have searched on here, but couldn't find my exact answer, so i apologize if this has been covered. 

I am going to be taking ownership of this property with two tenants in place each of which are now on month to month leases. Because I am buying this property owner occupied, I will need to issue notice to one of my tenants. With that being said, I have a couple of questions:

1. The owner has offered to issue the notice to the tenant, but would this be better if I did it once I took ownership? 
2. Although I am only obligated to give a 30 day notice, I was going to give a 60 day notice, but I do fear that if that tenant is upset it could backfire on me and they won't pay the last months rent. Any thoughts?
3. Do I need to get the tenant who is being issued notice on a month to month lease between he and myself? Obviously it would be hard to ask them to sign a lease and then 2 sentences later ask them to vacate.
   
4. It is my understanding that when I inherit tenants, the leases still stand. With that being said are they obligated to update their month to month leases on my terms?
5. Should I get a new application filled out so I have all updated info?
6. Lastly, any other advice or comments, please chime in.

I know that is a lot of questions, but I do greatly appreciate any advice which can be provided. Thank you!

[Michael Seeker]

Hey @James M. - good questions to ask for your first deal.  For the most part, you can do whatever you want...but having gone through something similar (though not always owner occupied) on multiple occasions, here's my feedback

1. The owner has offered to issue the notice to the tenant, but would this be better if I did it once I took ownership?  Let the current owner do this so you don't have to deal with it.  It will save you a lot of hassle.  If there's any way for you to require the seller to deliver one of the units vacant that would be ideal, then you don't have any risk of damages because if the tenant destroys the place you can refuse to close.
2. Although I am only obligated to give a 30 day notice, I was going to give a 60 day notice, but I do fear that if that tenant is upset it could backfire on me and they won't pay the last months rent. Any thoughts?  What is the point of giving the 60 day notice?  Are you not ready to move in?  Are you just trying to be nice?  In either case, go with 30 day notice.  If you run into issues and have to evict or pay the tenant to leave then the sooner you find out about it and deal with it the better.
3. Do I need to get the tenant who is being issued notice on a month to month lease between he and myself? Obviously it would be hard to ask them to sign a lease and then 2 sentences later ask them to vacate.  No, any lease/agreement will carry over to new ownership.  You should verify that the tenant is m2m with an estoppel signed by the tenants indicating their deposits, rents and lease end date (or m2m if none).
4. It is my understanding that when I inherit tenants, the leases still stand. With that being said are they obligated to update their month to month leases on my terms?  Once you take ownership, you can ask the tenant to sign a new lease (m2m or longer term) or you can ask them to leave or let them stay with the current arrangement.  In several cases, I have asked tenants to sign my standard format lease with the general terms of their old lease filled in (rent, deposit, late fees, etc).  This way I don't have to hunt through somebody else's lease or wonder if it covers things that are in mine or not.
5. Should I get a new application filled out so I have all updated info?  I would just ask the tenant for their info - in my experience, the only things you really need to know are their phone number, email address, pets and vehicle.  Once somebody is in your building it doesn't really matter where they work or how much they get paid unless you intend to re-screen them for some reason (which probably doesn't make a lot of sense).
6. Lastly, any other advice or comments, please chime in.  Best of luck!  Owner occupied multis are a great way to get into rental real estate with low risk and high reward.  It won't always be easy, but it will be well worth it in the long run.