My first property (CA) closed, Seller says she&#x27;s not leaving

OP

Member since 2021 · 6 posts · 15 votes

5y

Originally posted by @Crystal Robens:

If you have a profitable cash offer and a crazy squatter - I would take the offer. That's just my two cents. You made money - try the next one.

Thanks for the input Crystal, I’m leaning this way also. Curious if any investors here think think I should go the other way.

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

5y

Talk to your lawyer. Hindsight is great, but you should never have closed without walking the property to make sure it was vacant. If she's signed the documents, you can argue theft as she's taken your money. Is she willing to give you all of your money back along with covering your expenses?

9 Reply

OP

Member since 2021 · 6 posts · 15 votes

5y

Originally posted by @Theresa Harris:

Talk to your lawyer. Hindsight is great, but you should never have closed without walking the property to make sure it was vacant. If she's signed the documents, you can argue theft as she's taken your money. Is she willing to give you all of your money back along with covering your expenses?

She seems unstable now and/or is dumb like a fox. Part of the deal here is was to give her the opportunity to find some place to move because she was penniless before the transaction went through. Because of the horror stories in CA and Covid policies i did the escrow hold back which wilL cover the interests cost and more per day so I feel safe there. But you’re right, I have recommendation from my primary attorney for a RE attorney I should speak with them.

Kathryn Ryan-Dale

Member since 2019 · 6 posts · 3 votes

5y

Isn't she actually trespassing now?

OP

Member since 2021 · 6 posts · 15 votes

5y

Originally posted by @Kathryn Ryan-Dale:

Isn't she actually trespassing now?

I'm not sure the state of California looks at it this way, I hope I'm wrong though.

Darius Ogloza

Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes

5y

Not to rain on your parade, but California has some strict equity-skimming laws in its Civil Code section 1695. It seems here that you acquired a $600K property for payment of $100K + assumption of existing loan (was the loan even assumable)? I would seek legal advice concerning your compliance with this law before taking action against the seller.

8 Reply

Eric G.

Real Estate Broker · Orange, CA · Member since 2015 · 79 posts · 86 votes

5y

@James Thomas

What did you pay for the property? If I understood your post you paid off what she owed ($250k) plus another $100k for a total of $350k. Is that correct?

OP

Member since 2021 · 6 posts · 15 votes

5y

Originally posted by @Eric G.:

@James Thomas

What did you pay for the property? If I understood your post you paid off what she owed ($250k) plus another $100k for a total of $350k. Is that correct?

Yes thats right. Around that price

Andrew B.

Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes

5y

While I'm not a lawyer, and this isn't legal advice, the unfortunate truth is that the state of CA will look at this person as a tenant of yours, and your only recourse will be to evict her. I would hire an eviction attorney and begin the process ASAP. Hopefully you can use the escrow holdback to pay the costs. This is not something you want to DIY, as the eviction process is complicated and mistakes mean you must start over (from what I hear a CA eviction is the worst state to be do it in).

If you are not confident that you will be able to remain solvent through the process, you are probably better off selling it to an investor who can absorb the loss while he removes the tenant. You will lose some profit on the deal, but if you bought it right I'm confident you wont lose money.

Eric G.

Real Estate Broker · Orange, CA · Member since 2015 · 79 posts · 86 votes

5y

@James Thomas

First thing is that, yes, you would have to evict her to get her to leave against her will. Unfortunately there is a moratorium that doesn’t expire until end of June. That date has been consistently pushed back, so I wouldn’t bank on it actually expiring end of June. But if it did, you could start an eviction then. With the back log of eviction cases, what is normally a 3 month process will take much longer I’m sure.

I’m not shocked that this person sounds crazy. Any person willing to sell a $600k asset for $350k is clearly not of sound mind. In today’s market, she could get multiple financed offers at $600k if that is really market value. Even cash investors would be lining up.

So I don’t know anything about equity skimming, as was mentioned above, but I could certainly imagine a world where you end up in litigation. The owner could sue you. If the owner has any family members, I’m sure they would sue. A contract is only valid if both parties are of sound mind. This seller sure seems like they’ve got a case on that ground.

This is a tough situation you’re in.

OP

Member since 2021 · 6 posts · 15 votes

5y

@Eric G.

Thanks for the feedback! I talked to an attorney a little while ago that told me there was some risk here but there are other factors in this situation that work in my favor (my first time buying a home/property of any kind, I was not standing over her forcing her to sign anything - nor was I even present). She seemed of perfectly sound mind throughout the process, which can be attested to by the escrow office and several notaries. We think she may have started drinking again (she has had problems in the past and just learned of several current warrants out for her arrest related to multiple DUIs, one of which resulted in bodily injury of the people in the other vehicles )

It sounds like the consensus is to just sell the property to one of the cash offers that I've received recently and let them deal with the foreclosure process if that's what it takes, that must be the move.

Brad S.

Investor · Pasadena, CA · Member since 2017 · 612 posts · 523 votes

5y

@James Thomas

It sounds like you purchased the property when she was “ in foreclosure “ (with a notice of default already have been filed). If that’s the case, in CA, there are a set of foreclosure laws that kick in, which protect the seller in default, from predatory buyers. It’s been a long time since I was involved in this end of the business, but you definitely want to consult with a CA attorney who is very familiar with foreclosure laws. You want to make sure you are covered and doing everything by the book, or a judge could force you to pay her any profits you made on the sale and give her the house back. Really, I’ve read cases about that years ago. Cover your butt!

5 Reply

Brad S.

Investor · Pasadena, CA · Member since 2017 · 612 posts · 523 votes

5y

@Brad Sand

Some of the provisions I remember are, that you need to give the distressed sellers a certain amount of time between handing them the contract and them agreeing and signing it (a few days or more, I think), and you should disclose to them, that you plan on reselling it for a profit. Having them signed disclosure stating something similar to that...and there may be some other things, but it is it something to take lightly!

Brad S.

Investor · Pasadena, CA · Member since 2017 · 612 posts · 523 votes

5y

@Brad Sand

Ok, I can’t figure out how to edit my post. The last line was supposed to say it is NOT something to take lightly!

Jonathan Taylor

Lender · Los Angeles, CA · Member since 2017 · 916 posts · 647 votes

5y

@James Thomas being in CA this is tough. Reiterating to consult RE attorneys but in CA, any occupant of a building has more rights than the person who owns it. Sad but true. Being that you are on a timeline and the 'tenant' isnt motivated by money, Id say sell and get some profit. Sounds like you dont have a lot of time and not a lot of reserves to take on this potentially costly and time consuming process so take a profitable out if you can.

Scott Shelton

Investor · Wilmington, NC · Member since 2018 · 11 posts · 2 votes

5y

try calling your local city PD and Sheriff's Dept, but you will have to evict her. you are in a state that is stacked heavily pro-tenant. save everything from the transaction and reach out to the attorney/title co who handled it and make them aware. if you do have to evict (which I suspect is the case), start the process immediately.

Joe SplitrockPro Member

Moderator

Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes

5y

There was a well documented case here on BP where a CA home owner was in foreclosure and sold their house. I can't remember if the buyer purchased in foreclosure or rescued them from foreclosure. They refused to leave the property and the case was tied up in court for over a year, as the old owners argued they had never sold it. Even though the buyer had a clean title, they couldn't get the people out as they were arguing it was taken from them deceptively.

The woman may have realized when shopping for a new place to rent or buy, that real estate prices have skyrocketed. She may realize you just purchased her home for $250K less than it is worth in current condition. Good for you on getting a good price, but this could appear predatory in the eyes of the court. It sounds like the referral to purchase came from the private money lender, so that could be seen as you working with the lender somehow. This woman could have listed her house with a real estate agent and easily gotten a couple hundred thousand more dollars.

California is the worst when it comes to situations like this. She technically is a tenant, because you allowed her to stay in the property after she gave up ownership. Her tenancy was a condition of the sale. If she stays past June 1, you will be charging $150 per day rent. She will just become a tenant guilty of hold over. She could also argue title theft, which even if you can prove otherwise, it could take months to sort it out.

I would reinforce the message that the $20,000 starts dwindling at a rate of $150 per day starting June 1. That amounts to around $4500 per month in rent so she is better off finding a new place for less money. After $133 days, the $20K hold back is gone. If she is not gone by June 1, have your attorney ready to serve notice to vacate.

If you really believe someone is willing to give you $600K with the old owner/tenant in place, I would take that money and run. Run it by your attorney first to make sure it doesn't make your situation worse. My logical side says, how could it get worse, but this is California we are talking about. Take any logic and throw it out the window.

12 Reply

Nelson Kaeb

Fairbury, IL · Member since 2017 · 3 posts · 20 votes

5y

I've learned one thing from this post.... stay outta California.

20 Reply

Rob Golob

Investor · Valparaiso, IN · Member since 2015 · 84 posts · 47 votes

5y

@James Thomas

I hope she has relatives and they come after you in every possible legal way.

Predatory purchase.

Theft by coercion.

Theft by deception.

Screwing an unwitting person.

Making these up, but you get the point.

I doubt you have any type of license, but if you did you should loose it for sure.

4 Reply

Darius Ogloza

Investor · Marin County California · Member since 2018 · 1k+ posts · 2k+ votes

5y

I do not see how you can possibly pass good title to a 3rd party - whether through a service like Opendoor or through a private sale - under the circumstances you describe. Even if the seller does not slap a lis pendens on the property, her presence there and claims will eventually get you into a lawsuit with your buyer even if you somehow manage to close escrow. Your best (only?) option is to negotiate with the seller.

https://losangeles.cbslocal.co...

Mark F.Pro Member

Rental Property Investor · Elgin, IL · Member since 2016 · 326 posts · 270 votes

5y

Not the first time it's happened, saw this one a few months ago and looks like after 15 months they finally got possession in CA

Gary L Wallman

Rental Property Investor · Beavercreek OH · Member since 2018 · 422 posts · 970 votes

5y

Originally posted by @Rob Golob:

@James Thomas

I hope she has relatives and they come after you in every possible legal way.

Predatory purchase.

Theft by coercion.

Theft by deception.

Screwing an unwitting person.

Making these up, but you get the point.

I doubt you have any type of license, but if you did you should loose it for sure.

Rob,

A bit harsh don't you think. I don't see any deception or coercion. Just a willing seller and a willing buyer, the definition of a free market transaction. Never heard of a predatory purchase. Getting a good laugh at that one.

Immoral? Perhaps. As immoral as the foreclosure where legal fees and bank charges will likely eat up all equity? Doubt it. At least she walks with a hundred grand this way.

Screwing an unwitting person? You mean like when a hospital charges a sick person 20 bucks for an aspirin and 10k a day for a room. Or an emergency room charges 10 grand to check you out and send you home in 2 hours.

You must live in a different world then me.

14 Reply

Tushar P.

Member since 2019 · 332 posts · 171 votes

5y

Originally posted by @Rob Golob:

@James Thomas

I hope she has relatives and they come after you in every possible legal way.

Predatory purchase.

Theft by coercion.

Theft by deception.

Screwing an unwitting person.

Making these up, but you get the point.

I doubt you have any type of license, but if you did you should loose it for sure.

Maybe he is able to take advantage of this old woman because she doesn’t have any relatives...

Account Closed

Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes

5y

This whole deal doesn't smell good. Even if the seller couldn't pay on the $250K mortgage she had huge equity in the house and could easily have listed and sold it. The fact that she didn't indicates she was unsound of mind or at least very very naive. Nobody walks away from 350K equity so easily. My guess is that she realize it a bit too late and now wants fair compensation for her equity. Legally I dont know what that means but the OP shouldn't have taken advantage like that in the first place so hard to find too much sympathy for him here.