Investment Property With Existing Tenants - Property Management Utah
A crucial part of any landlord's operation in Utah property management is quality tenants. They make being a landlord a breeze, provide you a good return on your investment and are one of the best assets you can have. I have previously talked about tenant screening in my post "5 Ways Tenant Screening Helps - Park City Property Management". However if you are buying an investment property with existing tenants there are special considerations to make.
I have been the property manager for several properties either bought with a tenant already in place or sold with existing tenants. If you would like some tips the selling side of things I recently wrote "Selling An Investment Property - Park City Property Management" . Today we are going to focus on the buying side and how to deal with an investment property already occupied by tenants in Utah property management.
Tenants With A Lease
The first thing you should understand about buying an investment property with tenants is that the lease with the previous landlord survives the sale of the property. A tenant still has the same rights granted them by the original lease. You cannot change or alter the terms of the existing agreement even though the ownership of the property has changed to you. I recently was involved in the sale of a property for which I was providing rental management services in Park City. The purchaser of the property intended to keep it as an investment and function as the landlord after the sale. Naturally both the tenant and the prospective buyer had many questions about how to proceed. Both parties were informed that the existing lease that was executed between me as the property manager and the tenant would be in force through the sale and remain so until the term had ended. I informed the tenant and buyer that they would have to then negotiate a new lease once the term had expired on the current one. None of the terms of the lease could be changed after the sale, an example being the new landlord wanting to raise the rent or the current tenant claiming a different end date to the lease. This would apply for either short term or long term rentals in Park City.
Tenants Without A Lease
A tenant not having a lease on the property they are residing in can happen in a few different ways in Utah property management. Perhaps the seller of the property wants to reside in the property as a tenant after the sale. There could also have been some type of oral agreement between the tenant and the previous owner. Or the lease has expired some time prior to the sale but the tenant has not signed a new agreement with either the previous or current owner and has not vacated the property. Many of these circumstances could qualify as a "tenant at will", a specific legal term that basically amounts to an occupant of a property who does not have a current lease on the property. If you are purchasing a property and the tenant does not have a lease you should consider using an estoppel agreement prior to purchasing. An estoppel agreement is used to establish the terms of the lease agreement between the current landlord and tenant, Things like rent, deposit, term, and any other consideration can be spelled out so that you as the purchaser will know what you are getting into and a tenant cannot come back and claim different terms after the fact.
If you would like more information on buying an investment property with an existing tenant, or further information about Park City property management in general click the link below for a free consultation. You will receive valuable information specific to your property that will help you make an informed decision. You will also receive a free, no-obligation quote on our property management services. At CC Realty we specialize in making investment property ownership a trouble free experience. Please contact us today for your free consultation.
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