To become a landlord and buy a rental property, you must research deeply about the property and its residents, along with other aspects included in the sale. Before contributing in the escrow towards the purchase, you may need to make lots of queries. You must confirm all the important issues and information from the seller, in writing. Don’t give the seller any chance to mislead you at any moment. Demand all the required documents from him.
So, let’s find out what type of documents you may ask for:
1. A list of the property associated with the sale
You may need a list of all the personal properties that directly or indirectly are added to the sale. Different equipment, appliances, and other things belonging to the seller may enter on that list. You may leave anything that is excluded in the sale, but you should check the list first. You must verify all items listed by a physical checking before closing the deal. Try to avoid any miscommunication about the ownership of any property related to the sale.
2. A copy of all resident files
You need to get all the files related to the residents. This paperwork may include their rental applications, rental contracts (both past and current), payment bills, documents on rent increase, any legal notices, work orders for maintenance and repairs, residents’ contact details, complaint log for residents, etc.
3. List of security deposit and rent rolls
A rent roll is a seller certified document that includes all the data on rental units, the residents’ names, the date of their shifting, the market rate of rents, and the number of security deposits. Make sure the seller has all the rent related documents and information in writing.
You may need to consult a lawyer on how to occupy a rental property by following the laws of the state or local authority. You need to know about handling the residents’ security deposit properly and legally. As per the most state laws, the buyer and the seller of a rental property must inform the residents about the current status of their security deposit, totally in writing. The deposit may be returned to the residents or can be transferred to the new buyer.
In both the cases, everything must be written and listed. Without a proper written proof, a resident may claim a discount or a monthly rent credit instead of paying the rent in full.
4. A copy of important federal permits and licenses
If you want to own a rental property, the most important thing you’ll now require is licenses or permits. You may have to deal with a proper federal person or department in writing and inform them of the ownership transfer and the change of billing address. If you do not perform this protocol within stipulated time, the federal entities may charge strict penalties on you.
5. A copy of current utility bill
You need to get all current bill copies of every type of utility served in that rental property. Get documents on every account related to electricity, gas, water, sewer system, trash collection, phone, cable, and the Internet connection. Before the closing of escrow, ask every utility company to transfer the utilities. If you give them a prior notice, they may provide you the final meter reading to cut off the extra charges during the name transfer.
6. A copy of service contract
You’ll require all documents regarding service contracts and agreements. These will include contracts with gardener and landscapers, pest control service, ventilating, air conditioner companies, boiler maintenance services, heating, laundry services, elevator, spa, swimming pool authorities, etc. You may need to examine all the current contracts and renew all those which are pending.
If you don’t wish to continue a particular service or services, as per your request, the seller will send a prior notice to the service providers, mentioning the cause and final dates.
7. A copy of the seller’s latest insurance policy
You must look into the aspect of securing the rental property through an insurance policy. You must apply for a new policy at the time of transferring the ownership. Also, ask the seller if he has any existing policy or not, and demand the information with a copy of existing policy or declaration of coverage. This may help you to get the extra benefit if you are getting a new higher valued policy. After getting the old policy papers, take the initiative to check if all the records are accurate. This will prevent any possibilities of future disputes regarding the safety of your rental property.