Expert: Karyn Foley - 7/16/2009

Question
I have recently bought a house with good tenants which would like to stay on. I would like to keep them but am unsure how to deal with the agent who originally found them for the previous landlord as its an agency I have had issues with in the past and dont want to use them going forward. Am I bound legally to this agency as they originally found the tenants or can I continue to let to these tenants privately? Many thanks

Answer
Dear Mel:  A question that can be answered by asking the tenants to show you a copy of their lease.  The lease probably had commissions paid to the company/agent who listed the property who then paid the company/agent who found the tenants.  The lease may also state that if the tenants renew the lease, then a commission would also be paid as per above for the extension or renewal of the lease.  If you cannot find the document from the tenants, have them call the agency asking for a copy of the lease that they signed.  Or - you could call.  After all, you want to do the right thing and they should be able to tell you what your obligation is, if any.  Ask them to kindly provide you with a copy so that you are reassured that what you are planning to do falls within the wording of the contract agreement.  If the tenants are still leasing under the original agreement, then you can let them remain on the property accordingly, as homes are usually sold subject to the existing lease.  Many cities have rental associations, property management associations, et cetera, who may provide you with some additional information and direction.  Don't make any promises or commitments until you read and understand the lease.  Good luck.  I applaud you for wanting to do what is proper.  I cannot give any legal advise, so you may wish to consult a real estate attorney, just to know your boundaries.  This would also be helpful to you in the future if you wish to turn your property into a rental, investment situation.  I have one word of caution, however, and that is to talk to your mortgage broker/lender who obtaining financing for you in order to purchase your house.  You may have obtained a loan for this house stating that you are going to live in the house.  Rental properties/investments properties can often have a higher interest rate than an owner occupied property.  If you go contrary to what you agreed to on your loan, you may be encountering a problem with your existing loan.  Don't be so quick to act before you do your homework.  Karyn Foley