Buying a house is one of the biggest and the most expensive investments an individual can make. But house hunting can often lead you to properties that have tenants, one or multiple. It can sometimes be seen as a problem if you are looking for a peaceful house to reside in.
For some, it can be a very beneficial arrangement if the house is more of an investment. But in any case, the person buying has to consider a few things and remember a few pointers when buying a property with existing tenants.
Check out Surex to learn more about the things you need to consider while buying a tenanted property in BC.
When buying a property with tenants, you need to understand that you would be taking over the role of a landlord. While it may sound complicated, it may not be quite so.
The lease agreement, executed between the tenant and the house’s original owner, has rights granted to both the tenant and the landlord. You need to be conscious of these rights and respect the lease agreement since it is a legally binding agreement. It is pertinent to mention here that breaching the lease terms may get you into legal trouble.
One of the most important things to consider when buying a house with tenants in BC is the tenants’ rights. These rights can vary from province to province.
Nevertheless, the tenants have their rights, and accordingly, you may ask them to leave or not. In addition, you cannot ask them to commit to new terms and conditions or increase the rent. Also, suppose you want to ask them to leave. In that case, you need to follow strict legal procedures, send them enough notice and communicate your intention effectively.
When you buy the rental property and assume the role of the landlord, the rights and obligations of a landlord are also transferred to you. As part of any lease agreement, it is the landlord’s responsibility to provide the tenants with a safe and clean environment to live in. These are accompanied by a few crucial rules that you will need to adhere to, such as:
- Keeping the structural parts of the building intact like stairs, floors, walls, etc.
- Ensuring access to clean water, sanitation, and other such facilities at reasonable times in reasonable amounts.
- Ensuring that there is no harm to the tenants from any known environmental toxins like asbestos, lead paint, etc.
- Maintaining all the common areas in a clean and hygienic manner.
- Providing the facility of garbage disposal and its removal.
- Ensuring that the ventilation, heating, and cooling units are working adequately.
In addition, there may be specific rules and obligations reinstated by the local or state laws in your area. Also, the lease agreement can have certain obligations agreed upon like mowing of lawn or watering plants, etc., which also need to be adhered to separately and cannot be avoided.
Also, ensure that you check if the property’s previous owner had some outstanding fines imposed or any legal complications from not maintaining the property as required. As you become the new landlord and owner, you would be held liable for outstanding fines and legal implications. It is one of the cons of buying a property with tenants and should be considered carefully.
The lease terms agreed by the tenants and the house’s previous owner cannot be altered within the period of the validity of the agreement. As the new homeowner, you cannot ask them to leave without any of the reasonable grounds for eviction. You also cannot increase the rent or include additional rules and obligations to the existing lease agreement.
A new landlord introduction letter can be helpful in such situations. It is a formal letter sent to the tenants by a new landlord to inform them of specific details that may have changed. It can be beneficial to send an introduction letter to help the new relationship start on a positive and friendly note.
It would be best to inform them that the lease agreement stands unchanged and inform them of all the new contact details and mailing addresses. It will help create an open line of communication and help establish a rapport if any issue arises.
Finally, as the new property owner, you must ensure that the tenants have tenants insurance. Since you cannot impose any further mandatory obligation, you can surely ask them to avail themselves of the insurance.
Tenants insurance does not only provide coverage for a tenant’s belongings but also covers their personal liabilities. Thus, if theft occurs or one of your tenant’s guests gets injured at your property, the tenants insurance will cover the expenses.
Some tenants insurance policies also cover expenses for hotel and food if the rented property is under maintenance or destroyed due to perils or other reasons listed in the policy. Also, the standard homeowner policy would not cover any losses tenants might incur.
Moreover, a tenant capable of shelling out funds for tenant insurance would usually have a good credit score and be financially stable. It will give you peace of mind.
Finally, it will depend on you as a new homeowner if you view a property with tenants as an advantage or an inconvenience. Although it can give you an immediate cash flow, buying a house with tenants in BC can be troublesome if the tenants are not well suited to your needs. So, make sure that you consider all there is to consider before committing to such a property. It is always best to talk to an expert before you make any decision.