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February 3, 2009
2 Fam purchase, estoppel letter
Hi Brownstoners,
We are closing on a 2 family. Our lawyer wants us to get a letter of estoppel from the tenant without a lease who would like to stay on. Is this standard practice? Does it really protect me of anything? If she won't sign it, I would think that she might not be someone I want living there. I also want to present it to her personally, I feel it might be less offensive if I meet her. Please advise.
Comments
I'd feel the same were I a tenant. wtf is estoppel?
Having existing tenants, assuming they're responsible is actually a good thing imo.
Posted by: cmu at February 3, 2009 5:21 PM
OK, I wasn't going to comment because I have not been in this situation, nor am I a lawyer, but:
My guess is the estoppel letter is just an accounting thing the lawyer needs at closing like they need ConEd receipts. It's incidental to your relationship with the tenant.
Arrange separately for the house to be delivered empty on close OR meet the tenant, see if she wants to stay on, offer a lease for her to sign, and so on.
Posted by: mopar at February 3, 2009 5:27 PM
your lawyer (not you) should be handling this - that's what you are paying them for -all he/she has to do is ask the seller's lawyer to provide it - it is standard and if you are financing, your bank will likely request it - unless you are absolutely comfortable with the tenant, you should request that the place be delivered vacant especially if you are going to live there as well
Posted by: jnjnjn2 at February 3, 2009 5:35 PM
oh yeah, its basically a statement signed by the tenant certifying certain things, like that there are no defaults under the lease, the rent has been paid - it prevents a tenant from claiming later on (i.e. - after the closing) a different state of facts
Posted by: jnjnjn2 at February 3, 2009 5:38 PM
The lawyer is going to send the letter to the other lawyer-who in turn, gives it to the owner to give to the tenant. The tenant has been there for years but she is paying way under market value rent. $1350 for a one bedroom one block from the Bedford L station. It is not a large apt,500sq ft good for one person or maybe a couple. She pays her own heat/hot water. Supposedly she is a great tenant, but who knows?
Posted by: bqe1970 at February 3, 2009 6:14 PM
Once again, the tenant-haters are around. Why assume she is not suitable? If she's reasonable, she would agree to a reasonable rent hike, maybe over 2 years. Besides, unless pristine, 1350 for a 500sqft does not seem low.
YOu could, gasp, talk with her. You don't need the lawyers' intervention. You could consider that she's been living there for a while and maybe you have a responsibility to her as well.
Posted by: cmu at February 3, 2009 9:04 PM
$1350 is low for the area, even with negotiable rents as reported in the Times. For $7k-$10k in paint, floors and cheap new appliances as necessary you could probably raise it $7k a year. However...
CMU has very reasonable advice. Why upset things if she is an agreeable tenant? Why spend the renovation money now in this economic environment? Why bother finding a new tenant and losing those months' rent?
Frankly I'm coddling my (williamsburg) tenants now to make their stay super-pleasant. It's good for all of us. I would bank the rent and wait on serious renovations until later. If you can afford $1350 from her until a later date.
Posted by: corolla at February 4, 2009 1:57 AM
Although talking with the tenant directly seems reasonable, our lawyer warned us to be very careful in dealing with the seller's tenants prior to the close. If something goes wrong with the deal, the seller could later claim that you interfered with his/her relationship with the tenant. I could see the tenant getting nervous about having a new landlord and then deciding on her own to move to a cheaper place before the close. The seller then could blame you for that if the deal falls through.
I would follow your lawyer's advice. Just my 2 c.
Posted by: likes2lurk at February 4, 2009 8:28 AM
Lawyers are trained to be paranoid. And so apparently are many posters here.
Use common sense. In the what, 2-3 months between when you talk to the tenant and closing, he's going to move (how? is there a lease? if not, he could move at a month's notice) AND the owner is going to be pissed off enough to come after you? For what? A month's rent?
If normal business was conducted in this climate, nothing would get done.
Posted by: cmu at February 4, 2009 8:40 AM
1350 plus she pays her own heat and hot water, she's been there for years and this is a problem, why? Unbelievable. And for a minor investment (I loved the "cheap new appliances as necessary) raise the rent 7k? I'm with cmu- tenant contempt abounds here.
Posted by: bxgrl at February 4, 2009 10:30 AM
Thank you bxgrl and cmu... I'm in total agreement.
Posted by: bren at February 4, 2009 10:46 AM
at the end of the day, you should do what you are comfortable with - if you like the tenant, keep him - if you don't, give him notice
Posted by: jnjnjn2 at February 4, 2009 11:09 AM
How about not giving him or her notice simply because you don't like them but if they are bad tenants? Don't pay the rent, trashed the place, harrass you over every little thing? Kindly remember that tenant through no fault of thier own is now going to be traumatized, and out a lot of money on your say so. Not very nice or compassionate.
Posted by: bxgrl at February 4, 2009 11:22 AM
no need to speculate if the tenant would be traumatized or out a lot of money - the person might even be able to find a better and cheaper place elsewhere - yes, it might not be nice or compassionate, but its still the owners choice
Posted by: jnjnjn2 at February 4, 2009 12:03 PM
Take it from a tenant- it's traumatic to find a new place in NYC, its traumatic to move and it cost a lot of money. Those are realities- and it isn't necessarily simply the owner's choice. In case you haven't noticed there are laws in this country to protect tenants from being shoved around. We had a whole discussion on this just yesterday- being a landlord is not the same as being a deli owner. there are responsibilities on both sides. If you can't deal with the responsibilities of having tenants nad think its all about being the lord of the manor, don't have tenants and don't depend on rent to help pay your mortgage.
Posted by: bxgrl at February 4, 2009 12:10 PM
you're funny - thanks for the laugh
Posted by: jnjnjn2 at February 4, 2009 12:19 PM
why thanks jnjnjn2- thanks for proving my point by not being able to make a snappy comeback :-)
Posted by: bxgrl at February 4, 2009 12:34 PM
not sure what point you proved, but you're welcome nonetheless
Posted by: jnjnjn2 at February 4, 2009 12:50 PM
I'm still trying to figure out why I'm funny :-)
Posted by: bxgrl at February 4, 2009 12:56 PM
jnjn2 is probably snickering at your naivete in talking about responsibility, ethics and landlord-ship in the same sentence, a connection he'd never think of.
Posted by: cmu at February 4, 2009 3:59 PM
I'm just trying to prepare for worst case scenario. I'll probably talk to her, she'll probably be fine, she can probably stay if she wants to. It is probably not worth the effort of renovating at this juncture. There is no lease and she's British so I can't really chase her to London to get 2 months unpaid rent, I don't know anything else yet about her status here. I want to keep my bases covered. I've given low rent to good tenants to keep them but they were always people that I screened and I always have a signed lease. Bxgrl, what's with all your piss and vinegar? That being said, I have a husband, a kid and a dog. I plan on being carried out of this next house, dead, feet first. So yes, this is going to be my castle and I am essentially, the lady of the manor.
Posted by: bqe1970 at February 4, 2009 6:56 PM
Point is, I don't think this letter of estoppel has much to do with you relationship with the tenant. It's a separate issue.
Posted by: mopar at February 5, 2009 2:01 PM
my piss and vinegar was to posters who were writing scenarios about the tenant without any real facts. No one says you can't be lady of the manor- but the minute you have a tenant, you not only take on a huge responsibility, you also take on the possiblility of a lot of aggravation and angst.And NYC housing laws.
My use of "you" was generic and not pointed at you specifically.
Posted by: bxgrl at February 6, 2009 11:50 AM
sorry then, I was feeling touchy last week, I over reacted.
Posted by: bqe1970 at February 9, 2009 9:39 PM
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