Inherited Tenants Lease Question - What Would You Do?

[Cory O'Dell]

We just purchased a duplex, and on one side the lease term is NOT defined. It states the day the lease was created, but not for how long or when it expires. It does include a canned statement about month to month at the end of the lease, but no actual term is defined. It looks to be a mistake and we just didn’t catch it until now. The other side lease is fine. Both sides the tenants are paying under market rent by about 15-20%. We did do an Estoppel and the tenant believes he’s on a year long lease from Dec 1 2018 to Dec 1 2019. It may be worth noting for this discussion that the tenants are related, it’s the younger son and wife on one side and the mom on the other. The lease also does not define who actually lives there, in fact it doesn’t even say tenant name until the signature block. The seller didn’t seem to care when we asked about who all resides in the units.

From my perspective, there are a few options at this point. We could be jerks and just say screw this guy and immediately not renew his lease (30 day notice etc) in order to get a tenant in paying market rent ASAP. It may be more complicated since his mom is in the other unit though. We could immediately raise the rent to market value and if he decides to stay, great, and if not we find a new tenant anyway. We could do an amendment to current lease and fix the term. We could sign him into our own lease and do a normal year term after our screening. We could continue on month to month and see how he actually is as a tenant and if he struggles to pay rent or adhere to his lease, then not renew and raise rent with next tenant. It seems we have a few options.

What would you do? Either way, we want to be honest in the situation and tell him that he actually didn’t sign a year long term like he thought, but we want to have a way forward when it comes to that conversation.

[Nick C.]

Did the seller sign the estoppel along with the tenant? If so, your tenant has a good claim he's on a lease until December 2019. 

I would see if he's going to be a good tenant and ride it out until you can move both of them out at the same time. If they have family members next door they are unlikely to go quietly and they may come "visit" the other side of the duplex and make things nasty for you. I especially would not want to go to the mattresses with the feeble inherited lease that you have. You'd be better off waiting it out, signing one of your leases with them, and if anything happens at that time you will be better protected.