Buying Properties in Estonia: Guide to Sitting Tenants & Lease Transfers

John Philips
Aug 23
3 min read

Why Buy with a Sitting Tenant?

Instant income—rent from day one; voids minimized.
Real performance data—existing rent, arrears history, and utility usage.
Lower marketing costs—no re-letting, staging, or vacancy risk.

Key principle: In Estonia, sale of a rented dwelling does not terminate the lease—the buyer steps into the landlord’s shoes for all rights and duties.

1) What Must Transfer at Closing

Item	Source	Buyer Tip
Original lease (+ amendments)	Seller/tenant	Check term, renewal, indexation, pets/STR clauses.
*Deposit (tagatisraha***) balance + interest (if any)	Escrow clause in deed	Make the notary transfer deposit to you or escrow it.
Rent & utility arrears statement	Seller’s ledger	Deduct arrears from price or require seller to settle pre-closing.
Inventory & condition report	Move-in photos	Update with a mid-tenancy inspection on handover day.
Keys, fobs, codes	Seller/HOA	Change cylinder or re-program fobs after title transfer.
GDPR notice & tenant data handover	Seller → Buyer	Only necessary data; store securely, notify tenant of new controller.

2) Pre-Purchase Due Diligence (Copy/Paste List)

☐ Lease term & break options; is it fixed or indefinite?
☐ Indexation clause (CPI or market-rate method).
☐ Deposit amount and bank account proof.
☐ Arrears log for last 12 months.
☐ HOA status: monthly fee, reserve fund, no pending special levy.
☐ Energy class & last utility bills (seasonality check).
☐ Tenant background (employment letter or previous references, where lawful).
☐ Any house-rule breaches (noise, pets, subletting/STR).

3) Contract Language to Add to the Notary Deed

Assignment of Lease & Deposits—seller assigns all rights; notary wires deposit to buyer’s escrow.
Arrears/Prepaid Proration—rent & utilities prorated to the day; arrears deducted from price.
Handover Protocol—meter reads, key count, condition walk-through attached as annex.
Data-Protection Clause—tenant data transferred solely for lease performance; buyer becomes data controller.
Vacancy Scenario—if seller promises vacant possession, add penalty per day of delay.

4) Tenant Communications Timeline

Day	Action	Notes
0	Seller notifies tenant of sale & impending landlord change.	Provide your contact email & IBAN to avoid mis-payments.
1–3	Buyer introduces themselves; confirms IBAN and next due date.	Include GDPR privacy notice.
7	Handover visit: meter reads, keys, photos; agree on any repairs.	Keep it cordial—relationship starts now.
30	First full rent cycle with new IBAN.	Send receipt & statement.

5) Rent Increases, Renewals & Termination—Fast Facts

No increase if the lease lacks a clause and is < 12 months old; add CPI indexing at next renewal.
Notice periods: 30 days (tenant, indefinite lease) vs 3 months (landlord, no-fault).
Early termination for breach (repeated non-payment, damage) requires written notice and cure periods—keep meticulous logs.

6) Valuation & Financing with a Sitting Tenant

Bank View	What Helps Your Case
Stable rent = safer cash flow	Provide signed lease, deposit proof, and 12-month payment history.
Below-market rent drags value	Show plan for indexation/renewal to market.
Tenant risk	Landlord insurance + legal-expense cover in place.

7) Risk Scenarios & Mitigations

Scenario	Risk	Mitigation
Hidden arrears	Cash-flow gap post-close	Deduct at deed; require seller arrears settlement.
Deposit missing	You fund repairs yourself	Notary-escrow deposit or seller credit at closing.
Undeclared subletting/STR	HOA fines, wear & tear	Add inspection right; enforce house rules promptly.
Tenant refuses access	Delayed repairs	Give 24-hour written notice; document attempts.