Landlord with No Leases or Deposits

[James Nelson]

Good Afternoon All,

I currently have a ratified contract for a 4 unit building. After getting under contract, it was brought to our attention after requesting copies of the leases that the current owner did not put the tenants under a physical contract, nor did he collect security deposits. As of now, two tenants may be there at closing. We are currently waiting for TOPAs to be signed, which has been going on for almost a month.

My current plan once closed is to have the existing tenants go through the application process. If applicable, have them pay the security deposit and first months rent. Mind you, I am located in a tenant friendly city which is DC.

Has anyone experienced this before? If so, what actions did you take before and after closing? 

[Jim Cummings]

@James Nelson. I would take a possible different approach. 

1. Find out what you can about the tenants from current landlord, if possible.

2. Since there are no leases, determine how difficult will it be to issue notices to vacate, IAW with DC Rental Ordinances. 

3. Meet the tenants. if they are paying on time, I would be inclined to keep them on Month-to-Month status until the situation settled down. When you are satisfied with these folks get them under a lease meeting your criteria. If they have been there for sometime and are paying the rent, I wouldn't bother with doing formal tenant application & screening. They are meeting the toughest screening possible - they pay rent on time and take care of the place.   

4. Tenants that seem to be difficult or not paying on time, I would issue a Notice to Vacate when it best suited your personal situation to get the unit leased again as soon as practical.  

Good Luck!