Landlord with No Leases or Deposits

[James Nelson]

Good Afternoon All, 

I currently have a ratified contract for a 4 unit building.  After getting under contract, it was brought to our attention after requesting copies of the leases that the current owner did not put the tenants under a physical contract, nor did he collect security deposits. As of now, two tenants may be there at closing. We are currently waiting for TOPAs to be signed, which has been going on for almost a month. 

 My current plan once closed is to have the existing tenants go through the application process. If applicable, have them pay the security deposit and first months rent. Mind you, I am located in a tenant friendly city which is DC. 

Has anyone experienced this before? If so, what actions did you take before and after closing?