Inheriting a lease - what to know

[Charlie Miner]

Hello,

I close on my first property (house-hacking a duplex) Sept. 1 and the lower level tenant is in a current lease through 4/30/23. I've reviewed the existing lease that I'll be inheriting upon closing and all seems to look good. What other steps might I need to take to do my due diligence? i.e. obtaining new security deposit, general tips and advice, etc. Any sort of checklist or books that one might recommend to a first-time landlord? Thanks so much! 

[Sabrina Sanchez]

Hi Charlie,

You can try to ask for an estoppel certificate ahead of time to see if there are any existing deposits and find out more information about the current tenants in general. This will help you know ahead of time if there were any deposits made other than the first payment of rent. I don't believe you can go and request a new security deposit as they have already signed a lease and the lease goes with the land aka the terms don't change with a new owner. However, when you renew one, you can ask for a security deposit and any other terms you’d like.

If you can get an estoppel certificate definitely compare the amounts to your numbers as they may be different from what you expected or what was advertised. If the seller gives you a hard time they may be hiding something.

With the estoppel certificate you can also verify the terms with the tenants so you don't find surprises later. We recently had a tenant request their security deposit when we sold a property and we came to find out that a relative was the original tenant on the actual lease who had moved out and took the security deposit.

Now with all that being said, I would still consider that every state is different so you might want to reach out to someone that is part of a landlord association or someone with experience in your state as well.