Just purchased first duplex. What info do I need from tenants?

Question

Hi there. I'm new here and new to the world of of real estate. We are very excited to learn as much as we can! My fiance and I purchased our first house last Friday. It is a duplex that is currently occupied on one side (we will be living on the other for awhile). The previous owner was initially "renting" the home out to his sons, so it appears no real legal documents or anything are in place. Friends of his sons are living there now I think. The only info we received upon closing was that there are 3 tenants on the other side. There was no lease agreement in place. Honestly, we don't even know their names. We met them briefly when we initially viewed the house, but haven't really seen them since. We want to increase the rent about $150 because they were paying less than the nearby average. We've now owned the house for four days and are unsure how to move forward with the whole rental process. From what we understand, the tenants were just sending the owner a check once a month. Our plan at this time is to introduce ourselves in person and give them a letter noting the rent increase, but we are unsure what other information we should get from them! Any guidance on this topic would be greatly appreciated! Thanks in advance!

Anthony Wick · Answer

@Kelsey IlluzziYikes. You could have asked for all this info before close. Did you get prorated rents for first month and damage deposits?With no lease it generally defaults to month to month. Definitely introduce yourself ASAP, do a walk through inspection/move in sheet and have all tenants sign it, give 30 days notice to either vacate or sign your lease. Since you don’t know anything about them you might want to ask them if they are even interested in staying, and tell them they will have to go through a full application process which includes credit, criminal, and eviction checks.

Nathan Gesner · Answer

I recommend you give them notice immediately, in writing, that you are the new Landlord. Tell them you intend to do things the right way, which includes screening the tenants, putting them on a lease, bumping rents to market rate, etc. They can either submit to that or they can give 30 days notice to vacate. If they choose to stay, they must apply, pass your screening, and sign a lease agreement. Be sure to screen every single adult.You can also provide them an estoppel certificate. These are normally filled out prior to purchase but you can still use it now to document the current situation. 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 address2. Occupancy date3. Is there a written lease? If so, review it to ensure it matches the estoppel certificate4. 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 rate8. Rent due date9. Security deposit amountYou 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.Give them one week to decide whether they are going to play ball or move out. If they decide to stay, screen them and determine if they're worth keeping. Then lock them into a contract. If they are below market, you can encourage them to stay by keeping the rent a little low but I don't recommend more than a 10% discount. I also recommend increases be done in one step, not in tiny chunks spread out over time because that just creates confusion and may help them stay longer than they actually can afford.

Kelsey Illuzzi · Answer

@anthony wick We asked for whatever info was on record, but apparently there wasn't any since it was a family friend... smh... Thank you for the input! That is very helpful. We did have an inspection on both sides. How do we go about doing the credit, criminal and eviction checks?

Patrick Menefee · Answer

@Kelsey Illuzzi I’m interested in this! I’m hopefully going to be under contract for a fourplex tomorrow and will need to figure out what to do with the current tenants as well.