Month to month tenant trying to sign a new lease before we close

[Jodi Campbell]

First time investor here! I tried the search function but didn't find anything. I apologize for my newbiness.

We are buying our first duplex. It is currently occupied on both sides. One is in a new year lease that started July at fair market value. The other side is month to month about 300 under fair maket value. Obviously we intend to increase that rent or terminate the month to month. It is currently being managed by a property management company. We just received their lease documents and they sent us an unsigned year long lease for the month to month tenant that begins the day after our closing date.

Can they do that? They are currently being managed by a property management company which we will not be using. Can we stop this lease from being signed? If it has already been signed but doesn't take effect yet can we basically void it? Can we back out of the deal since the terms of the tenants have changed? 

I am completely unfamiliar with how a tenant transfer happens and can't find a whole lot other than we inherit any current leases along with our tenants.  But thisblease doesn't start until after closing so is that an out for us?

Any insight would be greatly appreciated!

[Greg M.]

I'm confused. Are they asking you to sign the lease paperwork or are they providing you a copy of the leases that are in-force or going to be in-force?

They can sign the tenant to a new lease that starts after your ownership. It is their property until sold and they can do whatever they want with it including encumbering you to a lease. Your contract with the seller can restrict their ability to do this. You generally cannot terminate the lease just because you purchased the place, so you better have in writing what they can/can't do before the property changes ownership. You may be able to back out of the deal depending on what your offer states. Consult your realtor or lawyer.

You need to have it in your offer paperwork that no new leases are to be signed by the current owner/PM and include a significant penalty if they do sign a lease.