Tenant Horrer Story, Legal Issue, Seeking Advice

[Brett Snodgrass]

Dear BP,

Seeking advice on the following situation, I am mostly a Wholesale Real Estate Investor & Fix-n-Flip Investor and don't hold any Rentals, so I have never been in this situation, but please read below, and see if anyone has ever been in situation before.

There was an investor that was doing a rent-to own with tenants, (Price $36K at 500 per month, 100% of Rent went towards Price)

The Investor Sold the Home to me and disclosed to Tenants that I was taking over Agreement (Rent to own) with them, And they had paid 6K so far, So, I wrote a new Agreement with the Tenants at new Price of $30K, Rent $400 Month 100% Goes towards Price, and Tenants Pays Taxes and Insurance (names me additional insured)

Tenant Paid rent about 5 Months, Paid Insurance about 2 Months, and Never paid the taxes...  So after 6 months, I had the property manager evict tenants, and they moved out...

When I went to see home, (The home was Trashed, The furnace was stolen, and the water pipes Busted because no heat)  I took pics of home, but not the Trash...as I threw all trash in garage.

I decided to cut my losses as this home was in South Bend, (Only one I had there), and I just sold the House As-Is for $6000 Cash... (I got a witness statement from Agent who described home as Trashed)

Later, I get a summons from Tenant. Stating they wanted their rent back they put in the property (Since rent to own), $6000 from Prior Owner and $1600 From me) and said they put in 1500 of their own money to fix up property...  They provided Receipts in a stack of anything from lowes receipts, to Grocery, to a large Papa John's Pizza...(I guess they wanted me to pay for their food too...)

Anyhow, I hired Attorney, and did Discovery, Which the tenants Admitted not paying rent, and provided Receipts of their fixing up... So I am seeking options from here..  (The Tenants are using a law Student so it's free legal for them) Here are my options below..

1. Can have Attorney Fight it, and Counter Sue  for all damages, even though I know they wouldn't pay if I won so it would just cost me attorney fees) My Attorney is $300 per hour

2. Try and settle with them (I think they just want something), for like 500-1000 Dollars?

3. Get Advise from Attorney but if I have to fight it, I can represent myself, (as I don't see how they have a Case... )

Again, I don't want to rack a bunch of Attorney Bills.. but want to stand on principle in this situation...

Anyone been in this situation before...  My Attorney says we could just wait to see if they pursue further...  because anything I have her do obviously costs $...  Any advise?

Thanks,

Brett

[Marcia Maynard]

Never been in your situation.  However, human nature is "loud bark and no bite."  I would gather all the documentation you can and, as your attorney advised, wait and see what they do.  If they don't have a case, the law student will probably discover this and advise your former tenant not to pursue it.  If they do, then you will be prepared.  

Legal fees are a cost of doing business.  A good attorney could represent you well if it goes to court, make short order of this, and save you time and misery.  If it goes to court and you win, the court may even award your legal fees to be paid by the former tenant.