When selling income properties that have tenants in place, the buyer is to be provided with Estoppel Certificates. The Estoppel certificate gives the terms of the lease and provides a copy of the lease, if available, including the current rent, whether the rents are current, and the amount of the security deposit held by the landlord. The Estoppel is completed by the landlord and then it is confirmed by the tenants. Although the landlord attempts to get all tenants to sign, it is not a condition of the sale.
In a recent sale, one of the tenants wouldn’t sign the Estoppel certificate. The information provided by the landlord was completed and so the sale closed. In most cases when a tenant refuses to cooperate, it’s a problem tenant who won’t sign the Estoppel. It’s a sure-fire way to get off on the wrong foot with the new owner/landlord.
If income properties can be delivered vacant, they command a much higher price that if there are tenants. Unless of course the tenants are paying market rents. But that’s very rare, especially in the aftermath of COVID and the current environment of Rent Control.
There are a lot of nuances when selling income properties. Want to learn more? Just give me a call.
