Purchasing a rental while eviction is taking place

Purchasing a rental while eviction is taking place

Professional · Livonia, MI · Member since 2015 · 10 posts · 0 votes

Good Morning! I have an interesting scenario that's currently taking place and would like some feedback if anyone has the time. We are purchasing our second duplex and seem to be encountering a situation that we are not sure how to move forward on. Back in February we made an offer on this duplex and the offer was accepted. We knew there were some title issues so the closing would be a little over a month out. Tenants were in both sides of the duplex and the seller was fixing up everything listed on the city inspection. Moving forward, the title work took much longer than originally planned and we have signed 2 more addendums to the purchase agreement to extend the timeframe until closing. It was brought to my attention last week that the seller is evicting one of the sides however they have not moved out yet. We were asked to sign one last addendum to extend until June 9th to close but now I'm wondering what we could get stuck with if the tenants will not move out by then.

So my first question is: can you still sell a property in the middle of an eviction? If so, how does the new owner step in once that process has been started but not completed?

Second: If we decide not to extend the purchase agreement into June can we get our deposit back? I would think so since the contract would be void but again, never been in this situation before.

We want to purchase the duplex, I'm just uncertain on the problems we could be facing if these people refuse to move out....damage that will now be our responsibility to fix, squatters, ect.

If anyone is familiar with the situation and can give some advice we would appreciate it!

Thanks~

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  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    10y

    @Amy M., circumstances have changed since the original purchase agreement was signed, therefore you can either get your EM back, or go through with the purchase. How great of a deal is this without both sides rented out?

    If you are still interested in pursuing the deal, I would have your agent write up an addendum to the contract stating the tenants in Unit XYZ must be removed from the premises and the unit returned to the condition it was in on the date the contract was signed. 

    It doesn't sound like you are getting a mortgage for the property, if closing has been extended so many times, however if you are getting a loan and have had to purchase extensions for that, I would ask for those to be reimbursed as well. 

    Do you have an agent representing you in this purchase? 

  • Professional · Livonia, MI · Member since 2015 · 10 posts · 0 votes
    10y

    Hi Mindy, thanks for the response. The duplex is a good deal, we definitely want it. We already have some prospects for tenants from our other rental property so we were not too concerned about filling the side once they move out.

    We went through the sellers agent to purchase this one so I will ask her if she can add that to the addendum. I hadn't considered that before so thanks for the idea. We are using a small loan for the place but have not incurred any charges as far as that goes.

    Hopefully the seller will agree to getting the tenants out before closing and we can move forward!

  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    10y

    @Amy M., on the other hand, for a steep discount, you might offer to take the whole problem off their hands. 

    In any case, I'm glad I could help. That's what these forums are for! Keep us posted on the events...

  • Professional · Livonia, MI · Member since 2015 · 10 posts · 0 votes
    10y
    That's not a bad idea either! This sell was funding her retirement home in Florida so I think she's set on the price on this one. I'll have to remember that for negotiating future properties though!
  • Rock Hill, SC · Member since 2015 · 1k+ posts · 597 votes
    10y
    Originally posted by @Mindy Jensen:

    @Amy M., circumstances have changed since the original purchase agreement was signed, therefore you can either get your EM back, or go through with the purchase. How great of a deal is this without both sides rented out?

    If you are still interested in pursuing the deal, I would have your agent write up an addendum to the contract stating the tenants in Unit XYZ must be removed from the premises and the unit returned to the condition it was in on the date the contract was signed. 

    It doesn't sound like you are getting a mortgage for the property, if closing has been extended so many times, however if you are getting a loan and have had to purchase extensions for that, I would ask for those to be reimbursed as well. 

    Do you have an agent representing you in this purchase? 

    That was a really good answer

    Alex

  • Investor · Cincinnati, OH · Member since 2015 · 374 posts · 120 votes
    10y

    Buying the building is the elephant and the tenant issue is the flea.  Work with the seller to fix the tenant issue but I wouldn't let it throw the whole deal off the tracks.  You can always evict them on your own after the closing.

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