Purchasing a duplex with existing tenants

[Josh Kraft]

I am in the process of purchasing my first property to hold and rent and have ran into an issue. Both sides of the duplex are currently rented out, one tenant is happy and the other has run into some financial issues and has asked to be replaced so they can break their lease. I was under the impression that they were up to date on rent, but today the current property manager reached out to me to update me on the situation. The person is 2 months behind on their rent and the property manager already served them a 5 day notice. I am hoping the current owner takes care of the eviction (so they can have the judgement for back rent), but what if they do not? Will I still be entitled to their security deposit at closing? Can I file for back rent if the current owner does not and leaves me with a tenant who isn't paying? Can I say I don't want to close until that person is out of there? 

This is definitely not the way I wanted to start out :(

I'm not sure if this post belongs in the landlord section or somewhere else, since it is an odd situation. 

[Mindy Jensen]

Hi @Josh Kraft. Welcome to BiggerPockets. Congratulations on your first investment property and hooray that you have 50% of your tenants paying on time!

When is closing? It almost sounds like the seller misrepresented the circumstances. I would go over everything they have given you in writing, and if they told you everything was peachy-keen, I would ask them to evict before closing. You shouldn't have to inherit a bad tenant.

That said, if they balk at removing the tenant, you may want to evaluate if this is still a good deal.

I don't think you can file for back rent, because you weren't the owner at the time the rent was due. You probably won't get much if any of the security deposit once the tenant is evicted, because the property owner at the time of the past-due rent would be entitled to it, depending on your state laws regarding security deposits.

Since this seems like new information, not given at the time of contract, you may be able to get your earnest money back if you choose not to pursue the deal. 

If you do choose to pursue the deal, consult your real estate agent and ask them to write up an Amend/Extend Agreement, extending closing date until after the eviction has been cleared up.