Inherited Tenants


“What do you mean you don’t have my deposit, I paid the first and the last month’s rent up front!”

These are words that property managers never want to hear. Recently, we began managing a new property in the Houston area that was purchased by an out of state owner. The owner advised that there were existing tenants in place and emailed their current lease to me.


The lease was written in 2012, and showed no deposit amount. After a quick phone call to the existing tenant, she seemed surprised that the home had sold. She stated that she thought that she was going to have the opportunity to purchase the home and had qualified for a loan.

This was going to be a touchy situation.

I set an appointment to meet her and take some photographs of the home. She was agitated that the home had switched hands and provided me with several sheets of paper that showed all of the work she had paid contractors to complete on the home. New carpet, updated HVAC equipment, new paint, etc.

This was completed in good faith to the previous owner contingent upon the tenants being able to purchase the home. To make matters worse, the previous owner was in the ill, and unresponsive to inquiries on his old tenants.

The tenants claimed that they paid him first and last months rent in cash, and now that the home had sold, they were moving out. So in summation, there is no corresponding documentation on how they had paid the initial owner on the tenant side (copy of check, receipt, etc.) and no documentation in the lease that indicated any deposit was paid.

Now, the new owner and property managers are left with hard decisions. We have to tread lightly as to not agitate the existing tenants to where they begin to deconstruct the upgrades they have made to the unit, but we also cannot have them continue to stay in the unit for another 30 days rent free. A negotiation was made for the tenants to pay a partial rent payment in exchange to be out of the unit in 30 days.

The truth in somewhere in the middle with this story, and if you are a property owner seeking to acquire a rental property with existing tenants, understand that the situation should not be analyzed simply on “cash flow.”

The sale of property and conveyance of tenants can be tenuous and is not always representative of what the listing advertises.



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