{"id":4453,"date":"2020-05-12T20:22:25","date_gmt":"2020-05-12T20:22:25","guid":{"rendered":"https:\/\/dreamhomefinancing.com\/?p=4453"},"modified":"2023-07-08T21:14:20","modified_gmt":"2023-07-09T01:14:20","slug":"buying-a-house-with-tenants","status":"publish","type":"post","link":"https:\/\/dreamhomefinancing.com\/buying-a-house-with-tenants\/","title":{"rendered":"Buying a House with Tenants – Step by Step Guide"},"content":{"rendered":"

Buying a House with Tenants\u00a0<\/strong><\/span><\/h2>\n

\"buying<\/span><\/p>\n

Buying a house with existing tenants comes with both risks and rewards. If you\u2019re an investor who wants to become a landlord, buying a tenant-occupied investment property can be appealing in a way that you will start earning rent income as soon as you buy the property. However, the process becomes complicated if you want to buy the house as your primary residence and not as an investment property.<\/span><\/p>\n

It is essential to know what to expect when buying a house with tenants and be aware of the potential challenges you might encounter. There are certain guidelines and obligations that you need to know before deciding to buy a tenant-occupied property.<\/span><\/p>\n

Buying a House With Tenants as Investment Property<\/span><\/h2>\n

Most investors would prefer to screen the tenants and set their own terms and conditions in the lease agreement. However, if you buy an investment property with existing tenants, you will have to commit to the current lease agreement until the term of the lease ends. Therefore, you need to completely understand how you can manage existing and future tenants legally from raising rents to evictions.<\/span><\/p>\n

Here are a few important things that you need to know when buying a tenant-occupied investment property:<\/span><\/p>\n

1 The Existing Lease Remains Legal<\/span><\/h3>\n

The sale of a rental property to a new owner does not make the existing lease agreement null and void. Since leases are tied to the property itself and not to the owner, you will be legally bound to the existing agreement until the end of the term if you choose to buy the property. This means you will not be able to raise the rent, modify clauses, or terminate the lease just because you are the new owner. Hence, it\u2019s important to read and understand the lease agreement thoroughly and ensure you are willing to abide by its terms before deciding to buy the property.<\/span><\/p>\n

2. Understand The Rights of The Tenants<\/span><\/h3>\n

Understanding the rights of the tenants is crucial in buying a tenant-occupied property. There are certain guidelines that need to be followed especially when it comes to visiting and viewing the property. For expiring leases, it\u2019s essential to give ample notice to tenants if you are not planning to renew their lease. Ideally, tenants should be given 60 to 120 days\u2019 written notice that the lease is being terminated. You should also give prior notice to tenants if you are planning to change the terms of the agreement.<\/span><\/p>\n

3. Know Your Obligations As Landlord<\/span><\/h3>\n

Buying the house as an investment property means you are willing to take the role of a landlord, so you should be aware of the obligations that come with it. Your obligations as a landlord may vary depending on what was stated in the lease agreement.<\/span><\/p>\n

In general, you should be responsible for providing a safe and habitable environment for the tenants. This means you should ensure that the common areas are clean and in good condition and that the physical aspect of the property is well-maintained. Other possible landlord obligations include the need to provide the tenants with access to running water and heat, arrange for trash removal, perform regular maintenance of HVAC systems, and ensure that necessary repairs for the property are done.<\/span><\/p>\n

Buying a House With Tenants as Primary Residence<\/span><\/h2>\n

One big challenge that you need to face when you are buying a tenant-occupied house as a primary residence is the process of evicting the tenants. Because the lease agreement remains legal even with the change of ownership, you will need to wait until the lease term ends before you can evict the tenants and move in.<\/span><\/p>\n

Fortunately, there are exemptions to this rule:<\/span><\/p>\n

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  • When the existing lease agreement specifies that the owner (in this case the property\u2019s seller) has the right to terminate to the lease upon selling the property.<\/span><\/li>\n
  • If the property that you are buying is a foreclosure, you can refer to your state\u2019s law and regulations regarding notice to vacate.<\/span><\/li>\n
  • You can specify in your offer that you want to buy the property provided that it should be vacant upon closing. With this, the burden is placed upon the seller to negotiate with the existing tenants or to find a way to legally break the lease.<\/span><\/li>\n<\/ul>\n

    If your situation falls in any of the above, you may be able to have the property vacated upon closing. However, whatever you and the seller agree upon, it\u2019s necessary to carefully abide by your state\u2019s landlord and tenant law to avoid potential legal issues later on.<\/span><\/p>\n