What should I do if I buy a house with one year rental lease on it?

Asked by Kasa Li, Sacramento, CA Thu Jul 25, 2013

Help the community by answering this question:

+ web reference
Web reference:


Anna Chi Hua…, Agent, Elk Grove, CA
Tue Aug 13, 2013
First of all, I would say if you don't have any investment experience as a landlord it is best to buy properties without a tenant, this is only if you want to purchase a primary residence to begin with, if so you will be need to prepare yourself for ongoing repairs, and possible miss payments, etc that a landlord will anticipate. If you don't want to manage a property yourself, you can always hire a reputable management company to help you coordinate the property monthly.
0 votes
James Tan, Agent, elk grove, CA
Fri Jul 26, 2013
I am assuming that you are not an investor bu actually wants to live in this house. As eluded to by my esteemed colleagues, basically you have to be prepared to be a landlord for at least 1 year.

Before finalizing the deal, make sure you do your Due Diligence on the lease agreement, and the tenant. Review the tenant's payment history, his income, and whatever information the current owner has on them. Like Bruce said, ensure to get estoppel certificates.

If the tenant is NOT a good tenant, you may end up with a possible eviction and all the expenses associated with it. If the tenant is section 8, you might want to check with SHRA on how to terminate the lease, after it expires, etc. If the tenant is a good tenant, just make sure there is a common understanding that you will not be extending the lease once it expires. Alternatively, you may want to incentivize the tenant to break the lease. Who knows, perhaps for 1 month free rent, they may want to leave earlier.
0 votes
Jim Walker, Agent, Carmichael, CA
Thu Jul 25, 2013
You should learn how to be a successful landlord. The tenant has a right to continue to rent the property through to the end of the lease. Looking for a loophole to get around that tenant right would be a bad thing to do.

If you do not want to be a landlord, find a different property.
0 votes
Sue Archer R…, Agent, Palm Harbor, FL
Thu Jul 25, 2013
Sorry, two more cents here. There's the law and then there's what tenants do. That's not always the same. You assume some risk on the condition of the home, if they're occupying it after you take possession, whether they move out, even during an eviction...it gets messy in some cases.
0 votes
Michael Thom…, Agent, Sacramento, CA
Thu Jul 25, 2013
The current law for eviction may be in your favor if you plan to occupy the home.

You can get a glimpse of CA laws at;


And Federal protection laws at;


It would also be best to speak to an eviction attorney.
0 votes
Sue Archer R…, Agent, Palm Harbor, FL
Thu Jul 25, 2013
All good answers here that really address the heart of the issue. You should only buy it if: 1. you planned to buy it as a rental property, or 2. you planned on buying it for cash or with a non-owner occupied loan, or 3. you had a written agreement from the tenant to move out soon after purchase.

Otherwise, find a new property to buy.
0 votes
Bruce Slaton, , Elk Grove, CA
Thu Jul 25, 2013
1st you want to discuss it with your lender unless your either using an investment loan to purchase or purchasing with cash, your lender for owner occupied loans will require you occupy the property within a few months at the latest depending in the investor who will own the loan.

2nd you become a landlord and you will want to make sure the previous owner transfers the deposit as you will be responsible for returning it at the end of the tenancy and get estoppels from the tenant so there is no "the previous owner agreed to this" etc.

Depend on your agent for advise though and consult a good property management company if you have no experience.

BUT just remember purchasing a home with a tenant in place and doing so with an owner occupied loan could be considered fraud and do not start this run with that hanging above you

Best of luck

Bruce Slaton
Realty World eCurb REALTORS
0 votes
Alan Kurpiew…, , California
Thu Jul 25, 2013
The lease transfers with the property, and so the tenants are allowed to stay through the duration of the lease. You do have a few options, however:

- You can do nothing, and use the rent to (hopefully) cover your mortgage payment, which would make this an investment property until the lease ends. At this point, you can either continue it as a rental (with same tenant or a new one), or provide a 30-day notice before expiration and move in at that point
- You can negotiate with the tenants and see if they would agree to move early (either of their own free will, or as a buy-out)
- You can find a different house without any lease attached to it

It really will depend on the tenant, the rental market, and if you were desiring to move in to the property right away.

Let me know if you have any other questions!

Alan Kurpiewski, Realtor®
CA BRE 01912043
(619) 35-HOUSE
(619) 354-6873
Web Reference:  http://www.homes4schools.com
0 votes
I would disagree as each county is different - CA law is also trumped by Federal Legislation, most current 2009 Foreclosure act. Which usually allows a owner occupied property to give a 60 days notice, if the lease meets the test of a true lease. However, each county has its own rules and implementation of the law.
Flag Thu Jul 25, 2013
Keisha Mathe…, Agent, Elk Grove, CA
Thu Jul 25, 2013
You are agreeing to adhere to the terms of the lease and become a landlor if you buy the home. Were you looking for another option?

Keisha Mathews, REALTOR®
CDPE®, HRC®, HAFA® Certified
SAR Masters Club Member 2012
SAR Masters Club Steering Committee
Mathews & Co. Realty Group
@ Century 21 Landmark Network
(916) 370-1803 cell
lic#: 01439130
0 votes
Search Advice
Ask our community a question

Email me when…

Learn more