In some cases, buying or selling a property can be relatively simple – a seller lists their property, and a buyer purchases it. Where the buyer intends to live in the property or even rent it out in the future, this process is fairly standard. If, however, there is a tenant currently in place in the property being sold and purchased, the transaction gets a bit more complicated. That’s where estoppel letters come into play. So what exactly is an estoppel letter, and why is it important when buying or selling a property with a tenant in place in Asheville or Hendersonville? Read on to find out!
Estoppel letters, which essentially define the agreement between the tenant and current landlord as it will be transferred over to the new landlord, are extremely important when it comes to buying and selling property with a tenant in place, or if you are a tenant in a property being bought or sold. From either side of the equation, having an estoppel letter is a critical means of ensuring that everything runs smoothly during and after the transaction. A basic estoppel letter will cover the following:
- How much is rent? The estoppel letter should lay out exactly how much rent is, and on what schedule it is to be paid – weekly, monthly, and so forth. If any deposits or additional funds have been paid by the tenant, these should be laid out and defined as well.
- What type of lease is the tenant on? Is it a month-to-month lease requiring renewal regularly, a year-long lease with a defined renewal date, or a different type of lease altogether?
- Are there any current or outstanding repair requests? Documenting the request and the original date on which it was made will ensure that the tenant doesn’t have to wait unnecessarily for repairs to be completed and that the new landlord is aware of any problems with the property that may need to be fixed. This can help to prevent misunderstandings and conflict between the tenant and new landlord moving forward.
- Is there any active litigation between the tenant and the current landlord? Generally speaking, you don’t want to purchase a property if there is ongoing litigation between the tenant and landlord. This will never make the transaction simple and can lead to a whole host of complications and trouble if the legal proceedings don’t run smoothly. No matter how attractive a property may be, it’s always a good idea to be wary of entering deals involving ongoing litigation.
- Is there a lease? If so, is it a written or verbal lease? What are the specific terms of the lease? Who has copies of the current lease? Thoroughly understanding whether or not the tenant and current landlord have a lease and what exactly the terms of that lease ensure that the new landlord knows what the agreement is with their tenant and that both they and the tenant are on the same page.
On the whole, it’s extremely important to obtain an estoppel letter whenever you acquire a property – or whenever you are a tenant in a property is acquired. On either end, having an estoppel letter and making sure that everything is laid out clearly between tenant and landlord will save both parties time, energy, and more than a few headaches!
If you’d like to learn more about estoppel letters or buying and selling properties with tenants in place, give Asheville Cash Buyers a call today at 828-222-6443, or visit us online at AshevilleCashBuyers.com!