Questions to Ask When Buying a House With Tenants

The questions

Open any question to see why it works.

1. 1

   Can I see every lease, including amendments and anything agreed by text or email?

   You take title subject to the leases, so whatever was signed becomes your agreement. Side deals about parking, a pet, or reduced rent in exchange for mowing rarely appear in the lease and still shape what the tenant expects from you.

2. 2

   Is each tenancy fixed term or month to month, and when does it end?

   A fixed lease runs with the property and does not shorten because the owner changed. Month to month sounds more flexible, but in many places ending one still requires a listed reason and a long notice period.

3. 3

   What rent is actually being paid, and is anyone behind?

   Compare the lease rent against twelve months of bank deposits rather than against a spreadsheet. Arrears the seller describes as catching up become your collection problem, and any repayment plan agreed with the old owner will be treated as binding.

4. 4

   Will each tenant sign an estoppel certificate?

   An estoppel is a short signed statement from the tenant confirming the rent, deposit, term and any promises made to them. It is the only document that tests the seller's account against the tenant's, and a refusal to obtain one tells you something.

5. 5

   How much is held in security deposits, and how does that transfer at closing?

   Deposits belong to the tenants and are normally credited to you at closing. Many places require them held in a separate account with interest, and the liability follows the property even if the seller has already spent the money.

6. 6

   Is the property or any unit subject to rent regulation or stabilization?

   This changes what you are buying. Regulated rents rise by a formula, tenancies can be close to permanent, and misreading it is the most expensive mistake available in a tenanted purchase. Verify it with the local agency rather than with the seller.

7. 7

   Does local law require a listed reason to end a tenancy?

   A growing number of cities and several states require just cause plus notice, and some require a relocation payment to the tenant. If your plan is to move in or to renovate, these rules decide whether the plan works and what it costs.

8. 8

   Is any tenant using a housing voucher or subsidy?

   Voucher tenancies come with a separate contract with the housing authority, periodic inspections and rules about how rent can change. It is not a problem, but it is paperwork you should read before closing rather than discover afterward.

9. 9

   Are there any current disputes, complaints, or open code violations?

   Ask about open cases at the building or housing department as well as informal complaints. Violations attach to the property, and some carry daily penalties that become yours on the day you take title.

10. 10

    Has an eviction been filed, and where does it stand?

    A case in progress often has to be restarted by the new owner, and any procedural error made by the seller carries forward. Ask for the case number so your attorney can read the docket instead of relying on a summary.

11. 11

    What has each tenant asked to have repaired in the last two years?

    Maintenance requests are the most honest condition report available. A unit with no requests on file either has a very tolerant tenant or a landlord who kept no records, and both are worth pushing on.

12. 12

    When was each unit last entered, and can I walk through all of them?

    Sellers sometimes offer one unit and a floor plan for the rest. See every unit before your contingencies expire, and remember that entry requires advance notice to tenants, so build that time into the inspection schedule.

13. 13

    What is included in the rent: utilities, parking, storage, appliances?

    Anything bundled into rent is hard to unbundle later. Ask how utilities are metered, because a single meter serving several units means you pay the bill and cannot simply start charging it back.

14. 14

    Who owns the appliances, window units and anything a tenant installed?

    Tenant-owned appliances leave when the tenant does, and a tenant who paid for a fixture may have a claim to it. This surfaces on move-out day rather than at closing, unless you ask about it now.

15. 15

    When was the last rent increase, and how was it delivered?

    Rents well below market usually mean an owner who avoided the conversation for years. Raising them requires proper notice, sometimes a cap on the amount, and often produces turnover you should be budgeting for.

16. 16

    Are there pets, and what was agreed about them?

    Pet terms, pet rent and extra deposits vary by unit, and assistance animals are handled separately from pets under fair housing rules. Trying to change any of this after closing is a common source of complaints.

17. 17

    What service contracts come with the building?

    Landscaping, snow clearing, pest control, boiler service and laundry equipment leases can run for years and survive a sale. Laundry contracts in particular are long, and the revenue split is rarely as good as the seller implies.

18. 18

    How does the seller communicate with tenants, and what will they be told about the sale?

    A tenant who first hears about a sale from a stranger at the door assumes eviction. Agreeing a joint letter with the seller before closing sets a workable tone and gets you correct phone numbers and email addresses.

19. 19

    What does insurance cost, and does the current policy assume the owner lives here?

    An occupied rental needs landlord coverage with liability and loss of rents. Get your own quote rather than relying on the seller's number, since carriers price older wiring, heating systems and past claims very differently.

20. 20

    If I need a unit vacant at closing, what would that take?

    The realistic options are a lease that is already ending, a cash-for-keys agreement negotiated before closing, or a legal process with notice periods. Having the seller deliver it vacant is usually cheaper than doing it yourself afterward.