Seller's Tenant Refuses to Move Out - 4 Days Before Closing!

[Eléne Ray]

Hi All,

Found myself in a crazy situation - would greatly appreciate any practical advice.

I am buying a 2 family in Medway, MA. The closing is scheduled for Monday, November 14. The house, as specified in P&S, is to be delivered vacant.

On Sunday, November 6, I get an email from a seller's agent with a nonchalant "The first floor tenant secured her new housing, but can't move out because the deleading hasn't been completed, and would I be OK to close as scheduled but allow this tenant to stay until December 1?" I inform both my and the seller's agent that it is a " Categorical NO", and I am not closing until/unless the tenant is out, and the house is delivered vacant.

No updates on Monday, November 7.

On Tuesday, November 8, my agent informs me that no, the issue now is not with deleading, but with the tenant's new housing availability or some such story. I tell her that I am not a full, I understand what the seller is doing - trying to push a holdover tenant (with little children - in MA! - with winter approaching!) on me and make it my problem. Repeat that no closing is taking place until/unless the house is vacant, suggest the seller finds a temporary housing for the tenant + if I need to extend a closing, the seller himself pays for the lock rate holding and also compensate my own tenant who is supposed to move in on November 16. Explain that I mean business, and any breach of contract would result in serious consequences.

Of course, with all my baring teeth, the situation is much more complex: I absolutely don't want to inherit this tenant with children and deal with an eviction situation in MA - yet, I need this house for all hosts of personal reasons, including taking care of a family member with advanced cancer. I am afraid of losing my lock rate + my own tenant doesn't have a place to go + my contractors have all been scheduled to start working + this house is meant as my personal residence, so I myself am supposed to move in within 2 months after the closing. What am I to do?

[Jeff Copeland]

Certainly not an ideal situation, but these are normal investor/landlord problems that happen all the time. Problems create opportunities: Hope (and negotiate) for the best, but plan for the worst. 

My first question would be does the tenant have a lease in place? (Hopefully you received and reviewed the leases as part of due diligence). If the lease has time remaining on the term before it expires, and the lease does not have a termination on sale clause, the tenant may actually have a leg to stand on and this becomes a much different situation. In the absence of a terminate on sale clause, the lease normally survives the sale. If the tenant is receiving federal funds such as Section VIII, it gets even more complicated. 

If the tenant does not have a lease (or the original lease has expired and/or she is otherwise month to month), and is not receiving any federal funding, then worst case this becomes a holdover eviction after she receives proper notice. 

I'm in landlord-friendly Florida, where it's relatively easy to evict someone, and even easier if they are a holdover. 

What you need to learn, very quickly, is how long does it take, and how much does it cost, to evict a holdover tenant in Massachusetts? Even though this may be Plan "C", now is the time to look into it and get your ducks in a row and paperwork (lease, notices, etc) lined up. Because the range of possible outcomes here seems to be:

1. The seller and tenant cave, and she vacates prior to closing, maybe with an extension that delays your move in date and renovations. 

2. You walk away from the deal and fight with the seller over your EMD. (BTW, for someone to advise this without knowing the specifics of the deal, or your current housing arrangement/expenses, is shortsighted...we simply don't have enough info to make this call.)

3. You get a concession from the seller to cover the cost of the eviction and lost rent, and work though the eviction yourself after closing with a MA attorney. 

As scary and terrible as Option 3 sounds right now, it's not the end of the world. In the grand scheme of things it's a small blip in the radar. It's likely a few months' worth of hassle, with the upside of:

-Not losing the deal

-Not risking your EMD

-Not risking your financing & rate lock

-Moving in on time

-Starting your renovations on the vacant unit on time

Even if the eviction takes six months, come Spring, you are are house-hacking a renovated duplex as planned. And you won't even remember the tenant's name 10 years from now.

BTW - What is your other alternative? Renting for a few more years? I obviously don't know - but it's a valid question and something to consider in terms of the overall cost (and opportunity cost) of walking away from the deal.