Seller refuses to sign estoppel agreement

[Weronika Jedrak]

We agreed on the price with the seller on two duplexes, however 3 units are occupied and tenants pay 50% below market value rent. We want to renovate it and rise the rents. Tenants are on month-to-month leases. The seller is refusing to deliver it vacant, she also refuses to have tenants sign estoppel agreement. We want this deal to work but we also have a lot to risk. She can provide all the financial records, lease and insurance docs, but that’s all the she’s willing to do. Agent says we can hand the tenants 60 days notice once we close on the property, but what if they refuse to leave ? What can we do in this situation to be protected ?  Any advice? We are in New Jersey.

[Nathan Gesner]

Quote from @Weronika Jedrak:

The estoppel is a means of confirming the terms between Seller and Tenant. If you can't confirm them, then you'll have to accept the risk that something was innaccurate or hidden. I don't think there's much risk. The Landlord may claim the Tenant paid $1,000 for a deposit and the Tenant may claim it was $2,000. You'll have to deal with those issues when they occur.

If the numbers are good, the numbers are good and you should move forward with the purchase.

Here's a NJ guide to removing Tenants: https://www.nj.gov/dca/divisions/codes/publications/pdf_lti/...

The day you close on the purchase, deliver a written introduction letter to each tenant with instructions for paying rent, reporting maintenance, etc. 

At the same time, notify them of the pending changes. Tenants that are 50% below market were probably never screened, likely to be problematic, and unable to afford the increase. I would give them notice to vacate within 60 days. Offer incentives if they leave early (e.g. give them 60 days to move out but offer $200 bonus if out two weeks early, $400 if out a month early).

If they fail to move out, have a good eviction attorney lined up to start the eviction on the very first day legally possibly. Be kind, but be professional. Tenants typically don't screw around when they see you mean business.