New Lease Contracts @closing?????

Question

James Wilcox · Answer

@Nathan Henderson it seems you are inheriting some tenants with your new purchase. Congratulations! With your 3 tenants that are ON leases, you must honor that lease as is stated in their current lease until renewal date, termination from say an eviction or notice of non-renewal (with appropriate notice), or death. These tenants are now yours with the owner (soon to be you) needing to pay their utilities as stated in the leases legally binding contract. This can be changed on lease renewal or non-renewal if you so choose when that date comes. If these tenants are Section 8 they may make you sign new leases but that is only possibly in that scenario.

As for your 4th (family) tenant, I would just ask what he wishes to do going forward, but you would need a lease signed for him to continue residence. If you haven't closed, yet I would at least try to throw that in to have a signed lease for him before closing. I would try to work this all out BEFORE CLOSING. However, after closing technically that tenant if not on a lease would be a "squatter" and you can file for eviction if you choose to then. Communication is key during this transition. A new owner is a scary time for the tenant because they don't like change. I loose many inherited tenants during transitions to new owners. You really don't want to loose all these tenants at once and have a ton a turnover cost and zero income coming in.

If you do want to have utilities not included with your rent make sure that the market can command such a price. Also, that you are not pricing out your current tenants by switching to utilities included. Good luck with all your future REI ventures!

Thomas S. · Answer

If you already have 6 units you should have already studied and learned your state landlord tenant regulations at this point in the game.

You need to learn the law yesterday if you are intending to operate a business. You will find all the regulations on line and should know them all as a responsible landlord.

As to your question, a lease transfers with the tenant. If they are on written or verbal M2M you follow the appropriate state codes to give notice to change or introduce a new lease. If they sign fine if not you give notice of non renewal and if they refuse to leave you must evict them.

If they are on a term lease you must wait till it ends.

Russ M. · Answer

Are they month to month leases?  What is the state law regarding existing leases when a building is sold.  I don't know about KY, but here the new owner has to honor existing leases.