Inheriting Tenants at a Residential Property

Our real estate lawyers at the Law Office of Stefan Cencarik, PLLC located in Lynnfield, Massachusetts are addressing the potential issues that may arise when a new property owner inherits tenants. In other words, what types of liability issues may a purchaser / incoming landlord take on when acquiring real estate that is rented to residential tenants? 

The first question that should be asked is what type of contractual relationship exists between the outgoing landlord and the residential tenants. Are the tenants at will? Does a written lease agreement state a certain term of months of years for the tenancy? Any real estate lawyer representing you in the purchase of the property will need to know the type of tenancy and need to review copies of all lease agreements.  This is so that your counsel may determine whether the outgoing landlord and tenants are meeting their obligations; determine what rights and responsibilities each party have; as well as determine the material components of the leasing arrangement such as monthly rent, term, security deposits, maintenance responsibility and others.  

The second question that should be asked concerns the financial affairs of the outgoing lessor and tenant-lessee relationship. Your Greater Boston real estate lawyer will need to understand the rent payment history; present amount of rent; method of payment; amount of security deposit; location and type of holding account for the security deposit; and others. This is in addition to any expenses required for tenant unit maintenance and repair issues. 

Finally, your real estate attorney will need to understand whether there are any civil or insurance claims, or other State or local administrative or regulatory actions, demands, or issues associated with the tenants.  In most cases, these types of problems are rare, however, it is not uncommon for landlords to be subject to claims by tenants for negligence (such as slip and fall on the exterior premises); negligence or breach of the warranty of habitability (concerning the condition of the property); or a landlords' failure to comply with zoning or other fair housing laws.

The reason that a buyer of a tenant occupied property must review these issues is that residential landlords in Massachusetts are subject to a tremendous amount of regulations and liability. There are statutes and regulations concerning fair housing, sanitary codes, security deposits, rent deposits, and others. Additionally, Massachusetts General Laws ch. 93A, regulating unfair and deceptive trade practices, also applies to residential landlords, and violation of the regulations concerning residential properties constitute per se deceptive and unfair trade practices.  The penalties for a G.L. ch. 93A violation include up to triple damages and reimbursement of legal fees and costs associated with prosecution of the claim.  

If you are buying real estate in Massachusetts that contains tenants, you should consult with a real estate lawyer that specializes in residential and commercial transactions, and has deep knowledge of the due diligence process.  This expertise is crucial so that you purchase an investment without fear of liability and to ensure that you are making a prudent financial decision.  The Law Office of Stefan Cencarik, PLLC provides commercial and residential real estate services and is able to serve as your real estate lawyer in Lynnfield and the Greater Boston area.