House selling with long term tenants, but tenants have no lease

[Gus Kazek]

I came across a duplex that I am going to put an offer on and the brokers notes are as follows. No sign. Tenant occupied, some notice needed. There are 2 washers and 2 dryers in basement, only one set stays with the house the other set is in the tenants. Roof has damage from the wind storm. Owner is taking care of it. Long time renters. Although rents could be much higher owner chose to not raise the rents because of the great tenants. There are no leases in place. Show downstairs first. Both units are the same. Any contracts subject to seeing 2nd floor unit welcome. Call lister before writing. Please make sure screen door off driveway is pushed closed so wind doesn't blow it open. Seller is selling "as is" and will not make any repairs. All inspections are for informational purposes only." What would you do if you acquired a house that had tenants but no lease?

[Nathan Gesner]

In every state I'm aware of, a verbal agreement is enforceable. You will probably have to treat it as if they were on a month-to-month but read the state laws to see exactly what is required.

 Your offer to purchase should include a requirement that they provide all documentation and agree to sign an estoppel certificate (also called estoppel form or agreement). The estoppel certificate is a form filled out by the tenant and then confirmed by the Landlord. It's supposed to ensure there are no surprises after closing. For example, you buy the place and the tenant could claim the Seller allowed them to paint the walls black or that their security deposit was twice what the Seller claimed. How will you know? An estoppel certificate fixes this problem.

Some things it may include:

1. Tenant name, contact information, and address

2. Occupancy date

3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate

4. Are there any modifications to the written lease?

5. Are there any verbal agreements or arrangements between the current Landlord and Tenant?

6. Current lease term (expiration date, month-to-month)

7. Current rent rate

8. Rent due date

9. Security deposit amount

You can find plenty of examples by searching for "tenant estoppel certificate doc" or exchange "doc" with "pdf" for more options.

Here is an example and explanation: https://eforms.com/rental/estoppel-certificate/

Some have a lot of legal jargon but this document does not need to be so detailed. This is an important tool for anyone buying a tenant-occupied property.