Illegal tenants! A situation that is happening right now!

[Mike H.]

Hey everyone! I am in a bit of a tricky situation and wondering if anyone has experience in dealing with a situation like this...

So I am looking to purchase an 8/3 REO in Brooklyn, NY. The numbers are great and I have a private investor lined up willing to lend on the property. Now to the problem. The structure is not up to code and has illegal tenants living in it. There are actually 8 units with 8 tenants. Illegal tenants have rights and you cant just force them out. Eviction would take way to long. Its freezing cold in New York, the tenants claim they are paying rent to a landlord and had suspicion of the home being in financial trouble. Obviously whoever the landlord is, is pocketing the cash (the home is foreclosed!). Not sure what the best strategy is to move forward... Paying off 8 tenants wouldn't be cheap and I'd have to get them all to agree. Time isn't on my hands. I want to make a "blind" offer to the bank before they show the home to 100 different investors creating a huge bidding war (seriously). The home needs $150k - $200k in repairs but there is amazing potential. All ideas and experiences to share are well appreciated!

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Originally posted by @Mike H.:

Thanks for the feedback guys. I think the best route is to make an offer contingent upon state removal of tenants and see what happens. Otherwise we would have to wait for a sheriff and with NY laws that could take awhile.
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Marie: The building isn't up to code and lawfully is not liveable. It is foreclosed and I do not know who this "landlord" is or his relation to the tenants. I think the tenants were clueless that they are living there illegally.

I will keep everyone posted.

Just because a property isn't "up to code" doesn't mean the tenants are living there illegally. The foreclosure is irrelevant to the tenants rights to occupy the property. For it to be truly illegal to occupy the building, there would have to have been inspections and citations and occupancy notices. Have you checked the street file on the property? Are there any sign or tags on the property from any muni agency? It's not illegal just because you say it is or because the owner or a contractor says it is. :)

What kind of foreclosure was it and who is the owner now? Is it a bank? The "state" doesn't remove tenants or squatters from property unless the state owns it. If the property has been tagged and cited as uninhabitable, the city or county can forcibly vacate the property. If the previous owner has been ignoring citations or demands by the city or county, they can charge him and/or the current owner to vacate and rehouse any rent stabilized tenants. Tread carefully.