5-Unit Apartment Building

Last week I closed an escrow that had gone on for quite some time. It's actually the third time I've sold the building (it's a 5-unit apartment building) and the fourth 'side' I have represented since 2003. The city bought it for redevelopment purposes, and I thought I'd share some words of advice, in case you are a landlord or aspire to become one.

In this case, my client lives in a different town and had not kept very thorough rental agreements or security deposit receipts. He had kept his agreements a little bit loose, and that worked well for him over the years, but that can cause difficulty at the point of sale, when those agreements become very important. When a rental property is sold, estoppel certificates become part of the escrow. These are certificates that the tenants fill out and sign to verify who is living in the property, the amount of rent they pay, how much they have given for a security deposit, the length and terms of their lease, etc. The purpose is to verify that the rental agreements the landlord is providing through escrow are in alignment with what the tenants are disclosing, and vice versa. In our case, this became a problem. We were given different statements, and we had to sort it all out and get to the bottom of who was living in each unit, dealing with language barriers in the midst of it all, and what to do from there.

If you are a landlord, be sure to keep all your agreements up to date, in writing, and accurate. Record your receipts. It's best not to handle things verbally. And when necessary, utilize a management company. Even I had to learn this the hard way! It's wonderful to own investment properties & it's another to manage them properly. Be sure to do both. It's worth the time and effort.