Inheriting Tenants for the first time

[Shawn Stiteler]

Hello Bigger Pockets family,

So I’m closing on a duplex on the 15th this month (January) and this will be the first time that I will be inheriting tenants. I’ve turned to my bigger pockets books and gone through everything I can find on the subject and it has answered most of my questions. However I’m still a little lost on a few details.

1. The existing tenants are on a month to month lease (defaulted to M2M after the 1 year expired. Do I need to do a whole new lease on the 1st of February? Or does this previous lease hold?

2. What do I do about the security deposits? One tenant doesn’t even have one, but the other does. So I would assume the landlord would just cut me a check for the exact amount and I would then deposit it into a new account and then give the tenant the paper trail and new bank info. But I could not find anything about that in the books I have and wanted to be sure.

3. What happens with January’s rent. My assumption is that we would just prorate the rent by days in January and the landlord would cut a check for that amount at time of closing, but again didn’t want to assume.

If there is anything else o should know I would greatly appreciate it. I am getting the existing tenants and landlord to fill out the estoppel agreement so thanks Brandon Turner for all your wisdom you have put in to pages! And thanks in advance to this amazing community for all the help over the last few years!

-Shawn Stiteler

[Suzanne Player]

You need to show your attorney the lease and the closing documents so that he or she can advise you given (1) the terms contained in your lease and (2) the state and local laws that apply. The deposit is typically owned by the tenant (until lawful deductions are made) & there will be regulations protecting the tenants’ rights. New York City has its own specific laws that govern, as do many counties & municipalities do on top of state laws. I don’t know where the subject property is, but New Jersey certainly has its own detailed tenant protections in place regarding the lease terms, rent, & deposits. 

You need answers to these questions that are tailored to your individual facts, to avoid inadvertently violating your tenants’ rights, or losing opportunities to protect yourself. The forums here are wonderful – but not for questions like these that require legal advice. Best to get it now before closing so that you start off your ownership & landlord tenant relationship in the strongest possible position.

Good luck & congratulations on your upcoming purchase