Continuous Inherited Tenant Issues

Continuous Inherited Tenant Issues

Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes

Hello Everyone! This is going to be a long post because I want to give all the details. I appreciate any advice you are able to give.

I bought a three unit property in Oklahoma City and inherited a difficult tenant. The tenant rented out the main house and the above garage apartment. When I bought the property with a VA loan, the tenant had to move out of the main house sii OK I could live there. The previous owner gave her $5000 to break the lease so she would move out of the main house. In the same agreement, he also assured her that her lease of the above garage apartment would remain "unaffected." In the state of Oklahoma, the lease transfers over to the new owner.

The tenant previously only rented out the main house at a rate of $975 a month with a separate lease that was superseded by by the current lease. Later the apartment was added to create the current lease. The current Lease has a rental rate of $1400 per month which includes both units. 

Now that I have ownership of the property and she has moved out of the main house, she believes that her rent is $425 a month and that she is not required to sign a new lease. Her reasoning is that the house by itself was $975 in the first lease. By subtracting the $975 from the current price of $1400, you are left with $425.

While that reasoning makes sense, the rate of $425 is not in any written document the previous owner held with her.

I have tried to offer her a new lease with the terms she wants and she refuses to sign based on her attorneys advice.

I have been emailing her attorney and her last response was 12 days ago. The last email from her said that she understands that the price on the lease is $1400 and the lowered price is not in any written document. I tried to call her attorney to speak about the matter and she is impossible to reach.

I understand that the lease legally transfers over and she technically isn’t required to sign a new one. However, she’s wanting to pay a price that is not agreed upon in any written document.

Does the 1st lease she had actually hold any significance in this situation?

Should she be required to pay the $1400,as the lease states, if she is unwilling to sign a new lease with a price specific to the apartment only?

Am I wrong to think a new lease should be signed due to the current lease not being specific to the apartment only?

Thank you for reading and thank you for any advice or suggestions you can provide!

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Jon KellyPro Member
Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
6y

@Justin Mayne tough situation. So she has a lease for both units at $1,400, then signed an agreement relinquishing access to the main house? Sounds like there was never an agreed upon price for the unit above the garage. It would be tough to argue that she should pay $1,400... I would likely either (1) agree on a price somewhere between $425 and average rent for the unit ($600-700), maybe $525?, or (2) accept the $425 and raise the rent or find a new tenant when the lease is up. You're fighting for an extra $125/mo, which is $2,250 over 18 months. It's not a huge amount in the grand scheme, and you may end up spending more than $2,250 if she damages the unit or stops paying rent altogether... I hope you're able to make money from the 3rd unit! Good luck! 

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  • Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    6y

    & what does your attorney advise???

  • Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes
    6y

    @Pat L. She agrees that the tenant should pay $1400 as the lease states since a lower amount is not in any for of documentation. I’m just doubting that the tenant will pay this amount come the 1st of the month even though she has been notified many times of the current lease rate.

  • Investor / Real Estate Agent · Oklahoma City, OK · Member since 2015 · 324 posts · 157 votes
    6y

    @Justin Mayne, I have had similar issues with inherited tenants.  

    What is the timeline left on the existing lease?  

    What is the market rent for the above garage unit? 

    I personally would have her sign a new lease that clearly states the terms of the lease. If she is unwilling to sign a new lease then I would file for eviction.  The scenario you have described seems like she is a difficult tenant and will continue to be one going forward, especially if she has her own attorney. 

  • Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    6y

    @Justin Mayne, beyond this issue, is she a good tenant? Is $425 good rent for the garage unit?  I know you are trying to clean up outstanding issues, and having a clear lease with clear terms is best for all parties.

    That being said, if you want to keep her around for any number of reasons, but primarily that she is a good tenant besides this issue, then I would let it rest for a while. Anything beyond that, you will likely need to engage an attorney to both help outline course of action given no clear lease agreement, as well as ensure proper procedures are followed to evict the tenant.

  • Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
    6y

    I'm not an attorney, but I agree with @Dylan B. on this. It's time to get her out.
    If the tenant isn't willing to sign a lease then the current lease is still in place. I would be careful though because if her lease specifies she pays $1400/month and that includes access to the main house, then it could cause you headaches. I would get with your attorney to see what your options are to get her out. This is definitely something that you want professional legal guidance on, she's going to fight you over whatever you do so you need to do everything by the books and expect to go to court over it. 

  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    6y

    You have a verbal agreement but an agreement all the same. Did the tenant sign any agreement with the previous owner acknowledging relinquishing the main house? You are likely only bound by the duration of the initial lease, when is the $1400 lease over? All that said listen to your lawyer because the devil is in the details of the original lease. 

  • Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes
    6y

    How much time is left on the original lease?  If it's just a few months, live with it, collecting the $425.  DO NOT SIGN A NEW LEASE WITH HER, UNLESS IT IS A MONTH TO MONTH LEASE.  Notify her two months in advance that the rent is going up to whatever amount you want to make it worth it to you to put up with her (and don't forget, she's probably getting utilities included now), keep it month to month, and she'll either pay it, or leave, or not pay and you can evict her for non-payment of rent.

    If there is a year left on the lease, you're in tough shape.  Her lease is for the main house, and the garage apt, and she could play hardball and demand to be allowed back in to the main house!  What a nightmare.  You really should have demanded that you receive the house free of all tenants.

  • Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes
    6y

    @Dylan B. The market value of apartments with the same square footage and quality in the area are $600-$700 a month. I would like to set the price at $550. Seems like a reasonable amount considering the comparisons. The current lease has 18 months left on it which really puts me in a bind.

  • Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes
    6y

    @Evan Polaski She is a decent tenant based on what the previous owner has told me. Seems like she typically pays rent on time. However the previous owner let her make whatever changes to the units that wanted (Paint, installing sinks, landscaping). It feels like she still has the same attitude that she can do what she wants with the unit. This is the reason her current lease is so long (18 months left). She wants to make her money back from “improvements” she had done for her AirBnB business.

  • Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes
    6y

    @Karen F. There is 18 months left on the current lease. The lease is for both units, however, she signed an agreement with the previous owner that relinquished her access to the main house. Being that she doesn’t have access to the main house anymore, should she sign a new lease with specifics for just the apartment?

  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    6y

    @Justin Mayne tough situation. So she has a lease for both units at $1,400, then signed an agreement relinquishing access to the main house? Sounds like there was never an agreed upon price for the unit above the garage. It would be tough to argue that she should pay $1,400... I would likely either (1) agree on a price somewhere between $425 and average rent for the unit ($600-700), maybe $525?, or (2) accept the $425 and raise the rent or find a new tenant when the lease is up. You're fighting for an extra $125/mo, which is $2,250 over 18 months. It's not a huge amount in the grand scheme, and you may end up spending more than $2,250 if she damages the unit or stops paying rent altogether... I hope you're able to make money from the 3rd unit! Good luck! 

  • Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
    6y

    @Justin Mayne I understand.  I think it just comes down to is she worth keeping around if good, and dealing with the inconsistencies of the lease issues, or push for the lease to be cleaned up and potentially lose her.

    Obviously, the ideal is you push just hard enough to get her on a new lease, and help her understand the rules regarding alterations, and keep her, but I read the original post that it seems like that isn't feasible.

  • Investor · San Diego, CA · Member since 2015 · 435 posts · 421 votes
    6y

    The fact is, she doesn't have to sign a new lease with you, because she has a valid lease for the next 18 months.  Fortunately, you have the addendum to the lease that relinquishes her rights to use of the main house (I assume that you HAVE that addendum?).  I think that you should leave well enough alone.  If the way the rent was split before was 975/425. then it is fair and appropriate that she pay 425 for the annex, and as long as she is paying it, you don't need a new lease.  Look, you bought the property knowing that she was in place, knowing that it was an odd situation with her.  You knew she still had an 18 month lease on the property.  I hope that the lease doesn't permit subletting, cause otherwise you could have a constant back and forth of Airbnb tenants in the annex.

    Just sit tight for 18 months, and then two months before the old lease is up, either offer her a new lease with your conditions and your rental rate, or notify her of non-renewal.  Remind her that any improvements or alterations that she left must be left in place, as per the terms of the lease (I hope).  If she doesn't pay her rent on time, evict.

  • Specialist · Owings Mills, MD · Member since 2017 · 485 posts · 415 votes
    6y

    @Justin Mayne

    I've never understood why people pay an attny for legal advice, then go on a forum and ask random strangers for advice they have already paid for. Crazy huh ? Go with your attny.

  • Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes
    6y

    @Brian Van Pelt I don’t pay for an attorney. I’m active duty military and get that service for free. I’m looking advise from experienced landlords who might have had similar situations.

  • Rental Property Investor · North Jersey Shore · Member since 2020 · 102 posts · 49 votes
    6y

    what you need is not just any attorney but the right attorney, and your free one is not it.

    Get one that's knows how things work and see done on your area.

    it's worth cost since you and your resources are out of their depth

  • Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    6y

    @Justin Mayne

    Collect what you can for the time being and then move to evict or raise rent when legally possible.

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    While it may not be market value, I agree with the logic of how she arrived at that number.  Over the course of 18 months, you'll be out about $2K.  not a big deal in the big scheme of things.  She made out well being able to do airBNB prior to you buying it and getting $5K from the previous owner to move out of the main house.

    She's going to be your neighbour and tenant for 18 months, just leave it alone and when it comes to renewing the lease, if she's otherwise good, bump it to slightly more than market value (this will get you some of the money back) and renew it, if she's difficult...don't renew it.  Just check your local laws to see if there is a cap in rent increases.

  • Rental Property Investor · Oklahoma, OK · Member since 2020 · 11 posts · 0 votes
    6y

    @Evan Polaski Update: The tenant has decided to move out! Now I will be able to get a new tenant who will hopefully not be as difficult. Thank you all for giving me advice. I greatly appreciate it

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