Theft by Swindle, RE Fraud, and Bed Bugs!! Need Advice!!!

[Albert Hoffman]

Hello BP,

I've never dealt with a situation like this before, so I could really use the expertise of the BP community.  This is a lot of information and questions for one thread, so I'll try to break it up using bullet points.

• Past:
  • Had an inspection of a six unit building by an inspector that I have used several times in the past.
  • During inspection, seller’s agent asked us not to talk to the tenants or mention the sale of the building (Red Flag!  Looking back, I was a fool to go along with this) .
  • Renegotiated post inspection and closed on the building last month.
• Present:
  • Tenant vacates after Section 8 refuses to pay rent due to previous owner’s failure to comply with orders to treat . . . bed bug infestation.
  • Another tenant informs me that the city has ordered the previous owner to have the entire building treated, but he never complied.
  • Same tenant informs me that at least three units are infested.
• Future:
  • I plan to renovate the entire building and get all new tenants.It’s in a great location but there is some major deferred maintenance to deal with, and the units need updating (new floors, paint, etc.).  Would very much like to avoid dealing with the infestation as a recurring problem.
• Questions:
  • Do I have any recourse as far as going after the seller for not disclosing the infestation, complaints from the tenants, and orders from the city to me?
  • What about the inspector?
  • What is the best way to deal with the bed bugs?  Since I need all of the tenants out eventually to complete renovations, I was considering getting them all out and then treating the building before starting work.
  • What is the best way to get the tenants out?  They are on month to month leases and the rents are below market (probably due to the infestation).  I'd like to avoid them getting angry and suing me for the bed bugs.

If you have questions, comments, or advice on any part of this situation, I would really appreciate hearing from you.  Many thanks in advance!

[Patrick L.]

Was there a seller's disclosure of any kind provided?  You may have a case against the seller.  You will not have any recourse against the inspector, the most you can generally recover from an inspector is their fee.  Did you hire an inspector to look for bed bugs?  A general home inspector is looking at the structure and would have no reason to look for pests.  

As far as the tenants your best option is a cash for keys agreement, give them a little bit of money and they move out happy and on good terms.