Selling House, Tenant Owes Back Rent, No Leverage to Evict Now...

[Julie Bretton]

Buyer is requesting rent rolls on 11 unit building. I have a tenant who is behind on rent but is now paying rent and making monthly payments.  Once the house is sold, the 11 months of catch-up payments will probably stop and I'm out several thousand.  

Can and would a buyer ever want to "take over the debt" to evict this problematic tenant?  (Tenant could suddenly "find" the money to avoid eviction and I'd get paid).  

Am I better off giving the tenant a "personal loan" - and take tenant to small claims court if he defaults?  If I give a personal loan and take on the debt, do I have to disclose that the tenant is behind? 

I don't want to ruin the sale.  Any suggestions?

[Matt Devincenzo]

Everyone needs to be in the know on this because how you address it depends on everyone. Your buyer could buy this with the expectation that they receive the outstanding unpaid rent as an asset, just like they inherit the security deposits as 'liabilities' they owe to tenants upon move out. You could also do like you mentioned and hold a personal note for what remains and let your buyer know that they will have no claim over the unpaid balance going forward. But in any case you 100% need to disclose that while this tenant is actively paying, they do owe an unpaid balance as that impacts the buyers expectation of the quality of the asset and tenant performance.