If you buy a house with tenants can you kick them out? Perhaps, you’re buying a house as an investment property or to use as your primary residence. The chance is that the property has tenants occupying it. As such, you need to consider a couple of things before you complete the purchase.
In this publication, you will understand:
- Tenant rights
- Landlord obligations
- Ways to limit the risks with the tenants in place
Follow this publication closely to learn the best tips for buying a property with existing tenants and not get in trouble kicking any tenant out.
If you buy a house with tenants can you kick them out?
Buying a property with existing tenants won’t be frustrating to deal with as long as you follow this guide to buying a house with tenants. Consider a question like “if I buy a duplex can I kick out the tenant?” Keep these considerations in mind:
1. Tenant rights
You need to understand that a house sale will not change the lease terms of the tenant. It works like easements and other covenants running with the land, whichever means the lease is tied to the land and not the landlord. So, even with a change in ownership, the lease stays attached to the property.
Like any other contract, a lease cannot be changed in the middle of the lease term unless both parties agree. Changes to a lease might include increases in rent or new procedures that cause a tenant to pay additional fees, like being required to pay rent online.
Texas State Law Library
This is to say that the lease in place before you complete payment for the property remains in effect. Moreover, a new owner can’t legally:
- raise the rent,
- change the clauses or agreements, or
- evict a tenant before the end of a lease term.
However, if you really want the tenant to move out, your options include:
a. Submit an offer on the house that includes “no tenants”
This offer will shift the burden of removing the tenant to the seller who may have to break the lease or offer an incentive asking the tenants to agree to a lease cancellation and move early. Otherwise, don’t close the deal if the seller is unwilling or unable to accept an offer that requires them to get rid of the tenants.
b. Buy the property and break the lease(s)
You can buy the property and break the lease with the tenants yourself. When buying a house with a tenant with a lease, you have to renegotiate the terms or buy out the tenants. However, the tenant is not obligated to accept your new terms as long as there is a valid lease. So, if you bought a house and tenant won’t leave, you can’t force the tenant to move out.
Moreover, if you try to forcefully evict the tenant or break the lease yourself, you can get in trouble with lawsuits you may not win.
2. Landlord obligations
As someone who just bought a house and tenant won’t leave (whether in California, Oregon, Florida, etc.), you inherit the obligations of the landlord. As a landlord, you must maintain a safe and habitable property for tenants, which will include ensuring that the common areas like stairways and hallways are safe and clean. All structural elements such as stairs, floors, walls, elevators, and roofs must be in good condition.
Ensure that electrical, plumbing, heating/air conditioning (HVAC), ventilation, and sanitary systems are properly maintained and that tenants can access running water, hot water, and heat in reasonable amounts and times.
Also, a landlord should provide trash containers and make arrangements for trash removal. Environmental toxins like lead paint dust and asbestos should also be managed to help tenants’ health.
Another thing to consider is the extermination of rodents and other vermin infestations. Note that local laws may have additional habitability requirements, so a landlord must review and comply with them.
And most importantly, if you buy a house with tenants, make sure to read the lease to know every specific obligation you may have as a landlord, including utility payments or mowing the lawn.
3 Terminating or changing a lease
If the tenant has a month-to-month lease, you can terminate the tenancy or increase the rent before the start of a new month as the new landlord as long as you appropriately notify them, typically within 30 days. This rule varies in different states, including the number of months the tenant occupies the house.
However, if the property lease is a fixed term like 6 or 12 months, the tenant can legally occupy the home until the lease is no longer active, irrespective of the current owner of the house.
As the new landlord, you can terminate the lease early in some cases including:
a. The lease language
If the language of the lease specifies that the owner (seller) can terminate the lease if they sell or transfer the property ownership, you can legally terminate the lease terminated after buying it with tenants in it.
b. Buying the property as foreclosure
You can follow the local laws to notify the tenants to vacate if the property is bought due to foreclosure. Some states mandate you to give the renters 30 to 60 days’ notice to vacate a foreclosed property before you begin eviction proceedings.
Tenants can sometimes agree to move out early with an incentive like a cash for keys offer (it could be from the inheriting landlord, trustee, or bank).
Lastly, if you’ll be using the house as your primary residence and not for rentals, you may be able to use an owner move-in eviction (OMI) to get tenants to move. The law varies in different states though. Generally, however, you must move into the property within a specified number of days of the eviction, usually 60 to 90 days, and occupy it as a primary residence for a specified number of years, typically 1 to 5.
Bought a house and tenant won’t leave
Some leases provide the owner of the property with the right to terminate the lease only if the tenant violates any clause within the agreement or ordinarily agrees to leave.
Otherwise, if you just bought a house and the tenant won’t leave, you can’t formally serve the tenant an eviction notice, which will stipulate the number of days the tenant has to leave the house.
As mentioned earlier, make sure not to try forcing the tenant to move—it doesn’t work, and will get you in trouble. A tenant with an active lease is not obligated to vacate the property as long as the lease is running. So, if a tenant won’t leave after you buy a house, try to offer them incentives such as cash for keys for them to terminate the lease early and move out. You’d also give them time to find a new apartment.
What to look for when buying a home with tenants
Before you close in on a house you want to buy, make sure to review the lease documents to find out what you’re getting into. Make sure the lease is written well and structured to meet local rental laws. If you find anything off about the lease, have the seller fix the language as a condition of your purchase.
Also, ensure to obtain any prepaid rent records, security deposit records, and money (to be transferred to you on the closing statement). You may need to keep the security deposit in a trust account following your local laws. The closing agent should also pro-rate the current rent payment between you and the seller.
Moreover, the seller must provide documentation on the property’s condition before the tenant moved in. Otherwise, you’ll find it difficult to know when a tenant is responsible for any damage if you don’t have a check-in report. It also helps to try and meet with the tenants before you close the deal to verify the current home condition and discuss the lease terms. Also, make sure you’re meeting the original tenant since some dishonest tenants can sublet as against the lease or even local policy. You should be able to prove an unlawful sublet with these tips.
Conclusion
It’s important to be appropriately insured as a standard homeowner policy is not enough. Let your insurer know that the house is being rented so they cover any tenant injuries, negligence, and other losses.
