Buying condo. Need to get tenant out for rehab?

Question

Hi BP,I’m closing in a condo next week and I need to get the current tenant out. This has all happened very fast. The offer was excepted last week, no realtors involved, just title company.The tenant has been told by the current owner that they will have to vacate the property by the first of February. They are about ten months behind in rent. what’s the best way for me to make sure that she is out by the first of February? I have thought about helping her with a security deposit for a another place, but is that helping or hurting…?Any input will be much appreciated!Matt

Scott M. · Answer

For anyone else reading this thread you need this to be part of the purchase agreement. If you want the tenant out before close you need to make it part of the deal and not just take an agents or sellers word for it. @Matt Friesz I don't know if this is part of your contract, doesn't sound like it, if not try and get an addendum signed. If not then stall the best you can. If you have a verbale agreement or an email then use that as those can be valid agreements. This is the only way you can guarantee this will not become your issue. All ready you are thinking of offering money to a tenant you don't even know. It only grows from here.

Dwayne Poster · Answer

As one of my purchases approached possession, the seller called to say he had just leased to tenants and couldn’t honour ‘vacant possession’. I told him no problem, we’ll delay possession, and for every month of delay, you will pay me $1k a month, and he can keep the balance of rent he was charging. 3 months later he was able to provide vacant possession and we went on to close. I told him, no rush, we can do this forever.Your purchase contract will guide you with your options, which basically comes down to either the seller provides vacant possession, or you assume tenancy.

Kelly Glass · Answer

In my state, the Seller is required to disclose any leases as part of the contract, and existing leases continue with the property. You need to know if the tenant is in a lease. Cash for keys is illegal in some states, but may work in others. This can be a complex situation, so you need someone that knows the laws in your state and can interpret your existing contract. The best course of action is to get the seller to evict the tenant. Have they started the eviction process already? If so, why is the tenant still there after 10 months? There may be moratoriums preventing the owner from removing the tenant. This Seller may very well know this tenant is not leaving and be thrilled to find a Buyer with zero representation to take on his problem. Even if you decide to walk away from this deal now, you need to know how to do that within your contract rights. I would get competent representation now.

Theresa Harris · Answer

Do not close until you have verified that she is out. Hopefully you put it in the contract to have it delivered vacant. Even if you didn't, do a walk through of the unit right before closing-you should do this with any purchase and most good lawyers/notaries will tell you to do this before they transfer the money. This is when you can make sure that it is vacant.they have been living there 10 months rent free-they are clearly going to milk it for as much as they can, Do NOT offer them any money.

Scott M. · Answer

You don't close on the condo next week for starters. You close after the tenant is out. Do not budge on this or you very well will be responsible to get the tenant out. Right now, before you close, this is the only time you have leverage. Use it.

Chris Thomas · Answer

@Dwayne Poster nicely done. I love this story. Will keep it in mind if it happens to me.

Scott M. · Answer

@Dwayne Poster hahahaha you were probably upset he handled it so quick. Well done.

Matt Friesz · Answer

@Mason Hickman going over the contract now…

Mason Hickman · Answer

@Matt FrieszThe boilerplate purchase and sale agreements the lawyers draft in our state usually include a "free from tenants" section on residential deals or they spell out the tenancy terms. Did the contract include any provisions regarding the tenants or estoppel agreements?

Matt Friesz · Answer

@Scott M. it is not part of my contract, soon to be! The money offer was something that I heard on one of the podcast, which I won’t do. I’m talking about this to the seller. Of course it’s a deal with a lot of different things happening. Seller’s out of country, a friend of mine has been taking care of the property, who is the sellers friend and that’s how I found out about this. The numbers are great, title has been great…now it’s getting over the tenant speed bump! I’ll keep you guys posted with what transpires.Thanks again!