It’s time to close on the property you’ve been working hard to buy…congratulations.

If it’s an occupied property, that’s even better. It means there’s already income flowing and you don’t have to do all the things you’d have to do with a vacant property; market the home, screen tenants, make upgrades and updates, etc.

While inheriting a tenant means taking over rental income with relative ease, it also adds a new layer of complexity. Occupied properties require careful navigation and attention to detail. You want to avoid legal pitfalls, misunderstandings, and financial surprises.

Let’s take a look at what you should expect when you’re closing on an occupied property. If you’re not already working with a professional property management partner, we’d recommend that you consider it.

Why Occupancy Matters at Closing

Unlike a vacant property, an occupied property comes with existing residents who have legal rights and practical needs. Their presence affects timelines, legal obligations, rent collection, and sometimes even your renovation plans. As an investor, understanding the rights of tenants, your responsibilities as the new owner, and the required documentation is essential.

The Investor’s Pre-Closing Checklist for Occupied Properties

Here’s what we make sure we’re prepared for, when we’re involved in a closing that includes tenants already living in the home.

Review the Lease Agreements Thoroughly

Before you close, you must review all current lease agreements associated with the property. These leases legally transfer to you with the sale (per the “assignment of leases” in your closing documents), and you must honor their terms unless otherwise negotiated. Verify things like:

Rent amounts and due dates
Security deposit amounts
Lease expiration dates
Tenant responsibilities (utilities, lawn care, etc.)
Clauses related to lease termination or property access

Ask for a rent roll and copies of lease applications to verify tenant income and reliability.

Ensure Security Deposits Are Transferred Properly

In North Carolina, the security deposit must be transferred to the new owner at closing or held in trust until properly delivered. According to the North Carolina Tenant Security Deposit Act, the new owner becomes liable for returning the deposit, even if they didn’t originally collect it.

You’ll want to confirm the amount held for each property, verify the location of the deposit (trust account, escrow, etc.), and make sure your closing documents reflect this transfer.

Obtain a Tenant Estoppel Certificate (If Possible)

A tenant estoppel certificate is a signed statement from the tenant confirming key facts about their lease: rent amount, term, deposits paid, and any oral agreements. While not legally required in North Carolina, it protects you against surprises, like under-the-table rent discounts or unauthorized occupants.

For multifamily or commercial properties, estoppels are often standard and can reveal inconsistencies between landlord records and tenant claims.

Clarify Who Gets the Current Month’s Rent

At closing, rents may have already been paid to the seller for the month. Ensure your settlement statement specifies how prorated rent is handled. This ensures a fair division of income and avoids tenant confusion about where to send future payments.

Also, notify tenants in writing after closing where to direct rent payments going forward, along with updated contact and management information.

Understand the Tenant’s Legal Rights in NC

North Carolina is considered a landlord-friendly state, but tenants still have significant rights. You cannot force early move-outs without legal cause, nor can you change lease terms or increase rent mid-lease.

If your investment strategy includes planned renovations, you may need to wait until the lease expires unless tenants agree to relocate voluntarily. You might want to raise the rent as well, but you can only do that after the existing lease ends.

Are you hoping to occupy the property at some point? That’s possible, but you must honor existing leases unless a specific early termination clause applies.

Inspect the Units (with Proper Notice)

It’s wise to inspect the occupied units prior to closing. In NC, the seller should coordinate access, and you’ll typically need to provide at least 24-hour notice to tenants. Look for deferred maintenance or tenant-caused damage. Check for unauthorized pets or occupants, and be attentive to safety issues or code violations.

If inspections aren’t possible pre-closing, ensure your due diligence allows for a post-closing walkthrough and escrow holdbacks if problems are discovered.

Communicate with Tenants Immediately After Closing

As the new landlord, you are legally required to inform tenants about the ownership change. North Carolina law doesn’t specify a timeline, but best practice is to notify them within 10 days via written notice. Let them know who you are, unless you’re working with a property manager, in which case we’ll handle the communication and provide the information. They’ll need to know if there’s a change in how rent is paid and maintenance requests are made.

Verify Property Insurance Covers Tenants

When insuring an occupied investment property, make sure your policy:

Covers tenant-related claims (such as, slip and falls)
Is written as a landlord or dwelling fire policy (not homeowner’s)
Aligns with your intended use (long-term rental, short-term rental, etc.)

Your lender will also require proof of appropriate insurance at closing.

Plan for Property Management Immediately

We have mentioned this before, but property management should be a priority. Have a professional property manager lined up before closing. We can:

Handle rent collection and tenant communication
Coordinate inspections or repairs
Maintain compliance with NC landlord-tenant law

Closing on an occupied property in North Carolina can be a rewarding strategy for investors looking for immediate cash flow. But it also requires careful attention to legal details, tenant rights, and financial logistics. The smoother your closing process, the faster you can stabilize the property and maximize your return.

We are here to help. If you’ve found an investment that you want to make a move on and it has tenants in place, contact us at Wess Cason Realty. We provide real estate and property management services in Charlotte and the surrounding areas in Mecklenburg, Union, and Cabarrus County.