Landlord's and tenant's rights

The tenant's rights remain unchanged. It is as if there had been no change in landlords, except in the question of unpaid rent, which we will get to later.

The existing rental agreement remains in force, unless it is changed on 30 days' notice, as is provided in the Lease. It is important that you get the original of the rental agreement for your files and read it carefully. There may be provisions in it which will affect how you can deal with the tenants in the property.

If there is no written rental agreement, the tenant has the same rights as those provided in the Landlord-Tenant Law and other applicable portions of state law and none other. In some cases there may be verbal agreements between the old landlord and tenant. The only circumstances under which those would remain in force would be if they appeared in the earnest money agreement when you purchased the property.

Those might be such things as the landlord wouldn't raise the rent until a certain date, or that the tenant is allowed and additional period of notice for any change.

If there is a lease in force, that goes with the property, and no terms of that may be changed until the term of the lease expires. It is important that you get the original of the lease and read it, as well, for the same reasons that it is important to read the rental agreement.

Notifying the Tenant

You are required to tell the tenant he has a new landlord. That must be done immediately upon your taking possession of the property. Follow the notification requirements in your state.

If you do not notify the tenant, that does not absolve you of responsibility for the care and maintenance of the property. You may not get the rent if the tenant doesn't know you're supposed to get it, either.

Unpaid and prepaid rent

Here is where it gets a little complicated.

What happens if the tenant is in arrears with the old landlord? What happens if the landlord has last month's rent and security deposit? Can you evict the tenant because he hasn't paid the old landlord rent owed to the old landlord?

Rent owed the old landlord falls into two categories. First, there is rent that is owed entirely to the old landlord. Second, there is the rent that is owed partially to the old landlord and partially to you.

Rent that is owed totally to the old landlord is no concern of yours, except to the extent that you may have a troublesome tenant in your new property. Except in the unlikely event that the old landlord assigns you the rights to the past due rent, it is not yours to collect or benefit from. The old landlord can sue the tenant for the past due rent and possibly get a judgment against him. But you are not involved.

Rent that is owed partially to you is very much your concern. That should be paid to you at closing. For example, if you are closing a sale on July 15 and taking possession of the property on July 16, you will be owed an amount equal to 15 days of rent. So if the tenant has not paid his rent for July, the old landlord has to pay you for it, regardless of whether the old landlord has collected it or not.

Rent that is prepaid, such as last month's rent, and all deposits, should be paid to you at closing as well. If they are not, you could be stuck with a month's rent and a bunch of deposits when the tenant moves out.

Evicting the tenant

Here is where it gets really sticky. If the tenant has not paid the old landlord the rent for the month, you probably don't want the tenant in your property. However you must give that tenant the appropriate notice because the rent is not owed to you, but to the old landlord.

Robert Cain, publisher of the Rental Property Reporter, has been providing solutions for the rental property industry for seventeen years. He is author of the landlord manuals Profitable Tenant Selection, Can Section 8 Work for You?, Using the Gross Monthly Rent Multiplier, the tape series “Avoiding the Tenant from Hell,” and several other booklets and manuals for landlords and property managers. In addition, he writes and produces newsletters for other companies that serve the rental property industry. He is a highly sought-after speaker, seminar leader and consultant on property management and real estate topics.

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