New Vs. Old (by Abby [OK]) Sep 3, 2009 3:22 PM
New Vs. Old (by MrRational [MD]) Sep 3, 2009 3:26 PM
New Vs. Old (by myob [GA]) Sep 3, 2009 3:35 PM
New Vs. Old (by abby [OK]) Sep 3, 2009 3:37 PM
New Vs. Old (by John [NJ]) Sep 3, 2009 4:26 PM
New Vs. Old (by JC [OH]) Sep 3, 2009 4:26 PM
New Vs. Old (by RR [WA]) Sep 3, 2009 4:41 PM
New Vs. Old (by abby [OK]) Sep 3, 2009 4:48 PM
New Vs. Old (by ManateeAlley [FL]) Sep 3, 2009 5:18 PM
New Vs. Old (by Mike45 [NV]) Sep 3, 2009 8:23 PM
New Vs. Old (by Mike45 [NV]) Sep 3, 2009 8:27 PM
New Vs. Old (by Mike45 [NV]) Sep 3, 2009 8:29 PM
New Vs. Old (by Mike45 [NV]) Sep 3, 2009 8:32 PM
New Vs. Old (by RR [WA]) Sep 3, 2009 9:36 PM
New Vs. Old (by ManateeAlley [FL]) Sep 4, 2009 5:09 AM
New Vs. Old (by billy [MA]) Sep 4, 2009 6:58 AM
New Vs. Old (by Virden [OH]) Sep 4, 2009 8:17 AM
New Vs. Old (by Mike45 [NV]) Sep 4, 2009 9:49 AM
New Vs. Old (by Mike45 [NV]) Sep 4, 2009 10:18 AM
New Vs. Old (by Mike45 [NV]) Sep 4, 2009 10:38 AM
New Vs. Old (by ManateeAlley [FL]) Sep 4, 2009 11:00 AM
New Vs. Old (by Lynda [TX]) Sep 4, 2009 11:00 AM
New Vs. Old (by Mike45 [NV]) Sep 4, 2009 11:54 AM
New Vs. Old (by p m h [TX]) Sep 4, 2009 5:03 PM
New Vs. Old (by Abby [OK]) Posted on: Sep 3, 2009 3:22 PM Message:
State Specific Question About: OKLAHOMA (OK)
Can my new landlord ask people to pay back rent that is actually owed to the previous landlord? --70.182.xx.xxx |
New Vs. Old (by MrRational [MD]) Posted on: Sep 3, 2009 3:26 PM Message:
the word you are looking for (and should ask to see on actual legal documents) is "estoppel". Google it. Learn.
Pay your debts to whoever has legal right to them.
--65.127.xxx.xxx |
New Vs. Old (by myob [GA]) Posted on: Sep 3, 2009 3:35 PM Message:
ab so tively!!!!!!!!!!
D --74.184.xxx.xx |
New Vs. Old (by abby [OK]) Posted on: Sep 3, 2009 3:37 PM Message:
I have paid my debts, thank you. My neighbor asked me. And I honestly wanted to know. So thank you for the information, and the assumption. --70.182.xx.xxx |
New Vs. Old (by John [NJ]) Posted on: Sep 3, 2009 4:26 PM Message:
Tell your neighbor to pay her debts. Better yet, why don't you lend her the cash so she can pay her debts. You know, spread the wealth. I'm sure she will pay you back, after all you are both tenants and are good for the dough.
John
New Jersey --68.193.x.xxx |
New Vs. Old (by JC [OH]) Posted on: Sep 3, 2009 4:26 PM Message:
I believe yes but it might be state specific and depend on the lease language. My leases do "carry over" to new owners in the event of a sale.... --66.72.xxx.xxx |
New Vs. Old (by RR [WA]) Posted on: Sep 3, 2009 4:41 PM Message:
It really depends on the sale and the circumstances. Generally, the closing should handle transfer of deposits and include settlement/transfer of all current account balances. You would need to know what arrangements were made between buyer and seller.
Step 1 is give the specifics about the sale and your circumstance.
A buyer is generally buying a building "warts and all" , meaning that past due tenants will owe this money to the new landlord.
--98.247.xx.xxx |
New Vs. Old (by abby [OK]) Posted on: Sep 3, 2009 4:48 PM Message:
thank you very much. this will be very helpful to her im sure. --209.183.xx.xx |
New Vs. Old (by ManateeAlley [FL]) Posted on: Sep 3, 2009 5:18 PM Message:
If your employer sold his business to a new owner, and your next paycheck was the day after the sale, would the new owner be obligated to pay you for your work for the previous owner?...... You are responsible for the agreement you entered into with the entity who owns and operates the apartment building for the monthly rental amount for the duration of the contract. --66.176.xxx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 3, 2009 8:23 PM Message:
Your state may differ, but generally NO. The tenant's debt for past due rent is to the then-landlord, not to the new landlord.
If the old landlord sold a business rather than (or in addition to) the building [very unusual], and if the rent was owed to the business instead of to the old landlord personally, then the answer would be yes.
If the old landlord ASSIGNED his "chose in action" (a legal term basically meaning his "claim," his "right to sue") to the new LL, the answer would be yes, if your state allows those assignments. But that brings up debt collection issues re assignments, which is whole nuther kettle of fish.
But the basic sale of the building would not transfer the right to collect past due rent to the new LL.
--216.175.xx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 3, 2009 8:27 PM Message:
Mr. Rational, what does "estoppel" have to do with this situation?
Estoppel is basically the concept that if you say something that the other side relies on to his detriment, you are bound by what you said. What did the tenant say in this situation that the new LL relied on this his detriment, such that the tenant is obligated to pay the past due rent to the new LL?
I don't get it. But I do understand the concept of estoppel very well.
--216.175.xx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 3, 2009 8:29 PM Message:
JC, as a matter of "common law," the lease rights and obligations carry over upon the sale, but the right to past rent is vested in the old LL, unless that right is assigned to the new LL.
--216.175.xx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 3, 2009 8:32 PM Message:
Manatee, normally a LL is buying a building, subject to the existing leases. He/she is NOT buying a business.
If I am selling a building owned by one of my LLCs, I am selling the building, not the LLC. My business will continue to be my business -- it is just that one asset (that particular building) will no longer be owned by that business.
If I sell the LLC, as opposed to the building, the LLC will still be the creditor of the tenant, and the new owner of the LLC can collect the past due rent in the name of the LLC.
--216.175.xx.xxx |
New Vs. Old (by RR [WA]) Posted on: Sep 3, 2009 9:36 PM Message:
Interesting points Mike45, and one day I hope to understand the law as well as you do. I am impressed.
One factor to consider about unpaid rent between old/new owner is the fact that only the current landlord(new owner) can impose pay/quit notice to get that rent. How is the seller supposed to compel the tenant to pay?
So many aspects consider in this scenario. It could be very complicated. I think it's best to handle at closing with a fair exchange between buyer and seller. But I suppose all deals are not fair in this world.
Regarding selling a business vs building, does your argument make sense? Rents determine value of a building, so unpaid rents lower the value of the building. This means the buyer of a building with past-due balances is getting a building of lower value. Perhaps they should be entitled to this old rent to compensate for the lowered value.
What if closing happens mid-month. Tenant owes part of the rent to the new owner , part to the old. Can new owner post pay/quit for full amount?
re: buying warts and all, rent is just one aspect. Deferred maintenance is another. Utility bills should be settled by closing agent, but there's always surprises. I expect gentlemen should be willing to work out any of these surprise after closing, but sometimes you just need to eat certain costs whenever you buy a building.
So I'd like to see a sale be a clean transfer of tenant balances, giving the new owner the right to pursue debt collection as needed.
--98.247.xx.xxx |
New Vs. Old (by ManateeAlley [FL]) Posted on: Sep 4, 2009 5:09 AM Message:
A sale of rental property agreement would identify the status of rentals and vacancies, and would transfer the RIGHTS to the future revenues from agreements, as well as liabilities from deposits held under the previous ownership. Any court would uphold unpaid and overdue rent due the current owners claim as the rights identified were transfered from the holder to the new owners....JEEZ! --66.176.xxx.xxx |
New Vs. Old (by billy [MA]) Posted on: Sep 4, 2009 6:58 AM Message:
tell your neighbor to pay her rent.probably the new guy knows all about her and wont tolerate any late rent. --208.58.x.xx |
New Vs. Old (by Virden [OH]) Posted on: Sep 4, 2009 8:17 AM Message:
Follow the lease, it most states it carries with the property, and estoppel is used in all 50 states for transfer of security funds. --76.241.xxx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 4, 2009 9:49 AM Message:
Virden: "estoppel is used in all 50 states for transfer of security funds"
Do you mean that the new owner is estopped (prevented by law) from denying that he is now obligated to hold and account and refund securty deposits? If so, this has nothing to do with the question of whether the pre-existing debt is owed to the old owner or the new owner.
Also, to the best of my knowledge, the obligations of the new owner vis-a-vis security deposits are set forth by statute, and are not based on the equitable doctrine of estoppel. See, for example, California Civil Code section 1950.5.
The only "estoppel" that comes to mind in the sale of a building relates to "estoppel letters." These are letters submitted to the buyer, signed by the tenants, setting forth the terms and status of their tenancy. The buyer relies on these letters, and the tenants are thereafter estopped from denying the accuracy of their representations. As I explained above, estoppel is a concept by which a person is held to the truth/accuracy of his statements on which someone relied to his detriment. So the buyer relies on the letters from the tenants reciting the rent amount and status, and the tenants are therefore bound by their representations.
--216.175.xx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 4, 2009 10:18 AM Message:
RR:
Your point about "One factor to consider about unpaid rent between old/new owner is the fact that only the current landlord(new owner) can impose pay/quit notice to get that rent. How is the seller supposed to compel the tenant to pay? " is a good one. The seller has lost the ability to evict, and is limited to the power of the small claims court. And the new owner cannot evict based on the rent owed to the former owner.
"Rent that is owed totally to the old landlord is no concern of yours, except to the extent that you may have a troublesome tenant in your new property. Except in the unlikely event that the old landlord assigns you the rights to the past due rent, it is not yours to collect or benefit from. The old landlord can sue the tenant for the past due rent and possibly get a judgment against him. But you are not involved." www.let.ie/articles/article16.html
The fairest way to proceed at closing is for the old landlord to account for and adjust the sales price for all security deposits and prepaid rent (last month's rent, usually). And for the old landlord to deal with the rent he is owed for past months on his own. I don't want to inherit his problems!! I am not his collection agency. I'll start with a fresh clean sheet. I'll deal with collecting the rent owed to me, and I have no interest in buying his account receivables.
RR, you said that "Rents determine value of a building, so unpaid rents lower the value of the building. This means the buyer of a building with past-due balances is getting a building of lower value. Perhaps they should be entitled to this old rent to compensate for the lowered value."
When a buyer is looking to purchase a building, he factors in uncollected rent in determining how much to pay. Unpaid rents do lower the value of the building, so the buyer is paying less for the building. He is not stupid enough to base his purchase price on the theoretical rents, but looks at the actual rents collected. He is buying this building because he thinks he can operate it better – lower costs, greater collections – and because he thinks he can improve it and increase the rental value. The unpaid rents HELP the buyer, by lowering the value of the building. So you think he should be entitled to the past-due rents as an additional windfall after he has already benefitted from their reducing the value and his purchase price?? The old landlord already took the hit on the purchase price and now you want to deprive him of the debts owed to him!
What if the old landlord had made a personal loan to the tenants to enable them to pay the rent. Now, the unpaid rent is not unpaid rent, but is simply a private loan. Do you want to assign that personal loan to the buyer as well?
"What if closing happens mid-month. Tenant owes part of the rent to the new owner , part to the old. Can new owner post pay/quit for full amount?" The buyer should have been paid his share of the rent for the current month's rent in the adjustments at closing, and the debt for any unpaid rent is still the old landlord's problem. The rent was due from the tenant on the first of the month to whoever owned the building on the first of the month. To quote from the site I referred to above, "Rent that is owed partially to you is very much your concern. That should be paid to you at closing. For example, if you are closing a sale on July 15 and taking possession of the property on July 16, you will be owed an amount equal to 15 days of rent. So if the tenant has not paid his rent for July, the old landlord has to pay you for it, regardless of whether the old landlord has collected it or not."
You are absolutely right that there will always be some further adjustments needed between the seller and buyer. Deferred maintenance is not one of those – Buyer does his due diligence and inspections and (hopefully) discovers these items. Utilities are shifted from one name to the other, and the old owner remains responsible for his portion, outside of escrow. Funds can be kept in escrow to cover various unknown amounts and adjustments. And there will always be tenants who continue to send the rent to the old address and the old name, and these will continue for several months. I agree, the buyer and seller must be honorable gentlemen (and/or ladies) and cooperate on these issues.
But the general rule is that unless there is an assignment of the right to collect past-due rent, that right remains in the seller.
--216.175.xx.xxx |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 4, 2009 10:38 AM Message:
Manatee said: "A sale of rental property agreement would identify the status of rentals and vacancies, and would transfer the RIGHTS to the future revenues from agreements, as well as liabilities from deposits held under the previous ownership. Any court would uphold unpaid and overdue rent due the current owners claim as the rights identified were transfered from the holder to the new owners....JEEZ!"
The first sentence of this post is correct, but I would have all-capped the word FUTURE, instead of RIGHTS. The Buyer is entitled to all FUTURE revenues and all liabilities from deposits held under the previous ownership (to the extent they were disclosed by the seller and/or in the estoppel letters from the tenants).
But the second sentence is not correct. A sale of a building does NOT normally transfer the right to collect past-due rents, and unless the sale documents include an assignment of past-due rents, the buyer does not have the right to collect them. No court would allow the new landlord to collect rents that accrued prior to the date of the purchase absent an assignment from the seller. Jeez!
Manatee, why would you as the buyer want to get involved in collecting past-due rents? How much would you pay (as an adjustment to the purchase price) for the assignment to you of $15,000 in past due rent? Let's say it is 30 unit building, fully occupied, and there are 5 tenants who are all three months behind, rent is $1,000/mo., making the past-due rent total $15,000. In your experience, once a tenant gets a couple months behind, what are the chances of your collecting? All you can do at that point is evict, right? So why would you want this headache? Why would you pay anything for the past-due rent? Why wouldn't you leave this problem in the seller's lap and let him deal with it?
We know that when tenants fall months behind, you can't get them back on track. If the tenants were starting fresh, couldn't you train them to pay the rent on time every month? If not, you would evict them as soon as they didn't pay in your first full month, and you'd have the security deposit to secure you. This is how I would want to handle this. Past-due rent owed to the seller is not my problem, and I wouldn't pay even 10% of the amount outstanding to inherit Seller's problem. I'd look at my NOT owning that old debt as a good thing, an opportunity to get the tenants back on track.
--216.175.xx.xxx |
New Vs. Old (by ManateeAlley [FL]) Posted on: Sep 4, 2009 11:00 AM Message:
Why would you decline a paper asset that would be considered part of a sale? If it was uncollectable wouldn't it be considered an offset and a legitimate tax deduction?... You certainly seem generous when dealing with other peoples assets...and if you were purchasing a building that had tenants, who here would NOT require the documents to reflect the existing rental agreements to be assigned to the new owners? ....you, maybe, Mr Mike? --66.176.xxx.xxx |
New Vs. Old (by Lynda [TX]) Posted on: Sep 4, 2009 11:00 AM Message:
Abby, the friend, Mike, etc.
Look, let's keep it simple. The lease contract states when, how much, and to whom the rent is due. When a property is sold to a new owner--THE LEASE AND TENANT GO WITH THE HOUSE--which means the lease and tenant to go the new owner. Not only does the new owner have to continue to honor the terms of the lease in place--but so does the tenant!The lease contract requires the tenant to pay the rent EVERY MONTH and if the old owner is not there to take it--the new owner is! That's all there is to it. Abby please tell your friend that past rent does need to be paid--and paid to the present collector--the present LL! --140.140.xx.x |
New Vs. Old (by Mike45 [NV]) Posted on: Sep 4, 2009 11:54 AM Message:
Manatee, of course I would need to see all of the documents -- not just the existing leases, but also the "estoppel letters" from every existing tenant. Did I ever suggest otherwise?
And I would insist on a letter from the seller to every tenant instructing the tenant that as of the next rent day, all rent is to be paid to me. I would need this letter from the seller as a condition of the sale.
And I would be paid (through adjustments at close of escrow) by the seller for the full rent from every tenant from the date that possession changed until the end of that month.
But I would not want to pay ANYTHING for the old past-due rent. That asset is NOT normally part of the sale, and it is not covered by the purchase price. I am not saying that I would refuse it if it were offered for free, but I would not pay for it.
You are under the mis-impression that this asset is normally part of the sale. It is NOT. To quote from Robert Cain, who is the publisher of the Rental Property Reporter, "Except in the unlikely event that the old landlord assigns you the rights to the past due rent, it is not yours to collect or benefit from." As he said, it is UNLIKELY that the past-due rents will be assigned. It is UNLIKELY because such an assignment is NOT NORMALLY part of a sale transaction.
If the seller is giving them to me, fine. But I won't buy them.
And I would never tell someone that the past-due rent is owed to the buyer. Absent an unlikely assignment, it is owed to the seller, to the person who was the landlord when the obligation was due.
--216.175.xx.xxx |
New Vs. Old (by p m h [TX]) Posted on: Sep 4, 2009 5:03 PM Message:
been a long time since I got my law degree. some intersting posts.
Abby. long story short. your new ll is not entitled to rents not due him/her.
advise your friend to pay new LL full rents on time.
old Ll is still free to go after her. and should. I would. she should settle up with him/her asap. --71.11.xxx.xxx |
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