Adventures in Property Management

Dealing with Inherited Tenants

System - Sunday, October 15, 2017
Property Management Blog

Finding that once in a lifetime deal on an investment property is a great experience. Inheriting someone else's tenants though, can sometimes be a challenging event. So, what exactly can be done about it?

Before closing? Current leases should be turned over with the seller’s disclosures. Look them over carefully. When purchasing the property, the lease is usually inherited. Which means, the new owner is bound by the terms of the existing lease. Things to keep an eye on?

  • How much is the monthly rent?
  • What utilities are included in the rent?
  • When does the lease expire?
  • Are there any restrictions, such as pets, smoking, etc?
  • Is the lease enforceable?

Once it closes you now have a new set of tenants. The previous owners should have turned over a copy of their application, lease ledgers, contact information, etc. Be sure to talk with the previous manager/owner about the tenants to get any 'back stories' you may need to know.

Make sure you introduce yourself (and/or your manager) to your new tenants. Give them notice of where to send the rent, turn in maintenance requests, and who to contact if there is an emergency.

So, what happens if you end up with a tenant who is paying $200 a month for your new 3 bedroom house? It all depends on their lease.

  • Are they on a month to month agreement? If so give them notice that their rent will be changing. Be sure to check the original lease to see how much time you need to give. If nothing is stated in the lease agreement, Utah has a minimum of 15 days notice before the end of the term (usually the end of the month) If they don't want to pay the new rate, you can give them notice that you will not be automatically renewing their lease agreement and they will need to move.
  • * Are they under a term lease? This is where it gets a little tricky. Talk with the tenants, ask if they would be willing to sign a new lease agreement. Unfortunately, you are bound by the terms of the lease they are under. This is why it was important to read them over back with the sellers' disclosures.

What happens if they are simply "bad" tenants? You would deal with this the same way you would with any tenant you would move in yourself. Give them the correct notices (3 day pay, comply, etc) and evict them if necessary.

Sometimes an inherited tenant is great and sometimes they aren't easy to deal with. The best thing you can do is talk with them and try to get on the same page. Be sure that you have read and understand the terms of the lease that they are under and that you may be bound to.