Tenants, Leases and Property Purchase

All to often properties are bought and sold while having an active lease in place. This can drastically change the desirability of a property and even drastically effect the properties value! In North Carolina purchasers of ANY residential property must honor an active lease for the entirety of the lease when it comes to long-term leases. When it comes to short-term vacation rental programs and leases the buyer of a property must honor those already pre-booked rentals for 180 days starting the day after closing.

When do I begin collecting rents and how?

Closing day will determine when you will collect the months rents as a purchaser of a property with tenants. You must always refer to the written lease that is in place to see on what day of the month rents are due. If your closing falls after this date you will receive those pre-paid rents in the form of a credit at closing as the seller has already collected, but is only entitled to the rents from the day rent is due through closing day. As the new owner of the property you will be entitled to all rents from the day after closing until the ending of the lease.

What happens to Security Deposits?

Most leases whether long-term or short-term will have an attached security deposit. When dealing with long-term leases it is normally in the form of a first month rent held in advance and used only if damages are incurred during the current tenants time in the home. When dealing with a short-term vacation rental these are normally an amount that will cover any damages that are incurred during the renters vacation stay. Both of these amounts belong to the owner of the property, whom is operating as the landlord. Therefore when a home sale is involved these amounts must be transferred at closing to the buyer from the seller, but in some cases can be negotiated.

When trying to navigate a home sale or purchase, many different obstacles can present themselves. Each and every home purchase and/or sale is VERY different. This is why you must rely on your real estate agent to help guide you into the right direction on this topic. Contact me to discuss purchasing and selling a home with tenants in place. I am happy to find just the right answer for you depending upon your situation and preference.