Buying with tenants - can I get rid if MTM renters?

Question

In light of COVID, I was wondering if there were any restrictions on getting rid of the month-to-month tenants in a duplex I am buying at end of the month. They are paying almost $500 below market value rent and I know they won't want to sign a new lease with rent that much higher. I don't know if there are any restrictions IF they haven't been paying rent now due to covid. I actually do not know if the tenants are up to date on rent. The seller claims they are but when he gave rental receipts he cut off the date showing when the rent was paid and refused to give receipts with dates. The payment receipts are also in someones name that is not on the lease and when I asked for clarification, they sellers agent refused to get an explanation for me. This won't matter if I can just instate my own lease after 30 days, but if there are US or WI restrictions I want to demand more before the sale goes through. Thanks in advance!

Corina Eufinger · Answer

There are no restrictions on issuing non-renewals at the state or federal level.  If the tenant does not move after receiving the non-renewal it becomes an eviction and this is where it gets sticky.  While yes, one judge has overturned the eviction moratorium it is still in effect because of a stay on judgment that was issued that prevents it from being "law" until the appeal process is completed.  That being said....how the eviction moratorium is being enforced by judges varies dramatically by county in this state including for non-renewals.  It's a hot mess.  Rock County has proven to be more by the book and allowing evictions unless stringent proof is provided by the tenant of COVID financial hardship.  Other counties such as Racine are incredibly dicey to push evictions through right now (even if they aren't monetary based).

That being said, maybe you should opt for month-to-month leases with the existing tenants and create a schedule of increases over the next 6 months.  Do a smaller one to start with (40%) then do the rest of the increase 5-6 months later.  If the tenant is on a M:M you could adjust the terms with proper notice which would include a rent increase.  If it offers some consolation, we have issued $40 rent increases to drastically under market tenants and not had anyone balk yet. Its not like there is a plethora of places for them to pick from to live with inventory so low.

Sophia Remley · Answer

Amanda, I had the same situation when I bought my first duplex in December. There are no restrictions on non-renewals. The day after closing I went to the tenant and notified them that I was not renewing their lease and had them sign a copy of their 30-day notice. In a perfect world the tenant will move out on time and not give you any trouble but sometimes that doesn't happen.

In my situation the tenant did not leave... I personally didn't want to go through the eviction process and hold up my renovation so I ended up offering them cash for keys.

If you plan to do any updates to the property you could have that conversation with them, let them know that the rent will be going up because of that and they may self terminate.

Bjorn Ahlblad · Answer

@Amanda Smith you could use Estoppel certs but the seller likely won't sign off; the seller is hiding the fact tenants are not UTD and probably much worse. At this point I'd walk. There is potentially way too much to lose with no evictions etc.

Rebecca Knox · Answer

You could do an amendment that tenants need to vacate prior to closing if your offer was contingent on proof of on time payment and seller is unable to provide proper documentation...or like the other poster said, cash for keys, but I'd ask for a discount to assume that risk. If it's in Milwaukee, I'm hearing evicting for non-renewal of lease rather than non-payment is better right now.

Nathan Gesner · Answer

The eviction moratorium is to protect people impacted by COVID-19 and unable to pay their rent. If they are on a month-to-month rental agreement, give them 30 days notice (or whatever your state requires) and get rid of them. Renting $500 below market will cost you $1,000 a month!

Buying with tenants - can I get rid if MTM renters?

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