May a buyer inspect existing tenant leases when purchasing a rental or investment property?
QUESTION: My client entered into a contract to purchase a townhome that was advertised as an investment or rental property. The Standard Form 2A11-T was filled out and made part of the contract, but the listing agent is now refusing to provide us with the current lease because of privacy laws. Is my client allowed to inspect the lease of the existing tenant? Is there some privacy law that would bar the seller from allowing us to see the lease pursuant to the contract?
ANSWER: If the seller collected personal information as part of the rental application process, then he or she has a duty under both federal and North Carolina privacy laws to not disclose such information to unauthorized third parties. “Personal information” includes, but is not limited to, social security numbers, driver’s license numbers, banking information, credit card numbers, and credit reports.
When the seller agreed to the terms of Standard Form 2A11-T, he or she agreed to provide your client with “true and complete copies of all existing leases, rental agreements, outstanding tenant notices, written statements of all oral tenant agreements, statement of all tenant’s deposits, uncured defaults by Seller or tenants, and claims made by or to tenants.” Some of these items may have a tenant’s personal information on them, but most of them likely would not. As long as there is no personal information on the lease agreement in question, then current privacy laws would not prevent the seller from allowing your client to inspect the existing lease in conformance with the contract.
If there is personal information on the lease, the seller can simply redact the personal information before turning it over for inspection. It should also be noted that if the seller used the Standard Form 410-T lease agreement, then the tenant has already agreed to the disclosure your client is seeking. Paragraph 30 of the 410-T allows a landlord to provide information about a tenant to third parties “in accordance with applicable laws.” If your client wants to inspect the tenant’s entire file, including the tenant’s personal information, then he or she should consult with an attorney to make sure they are authorized.
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