Foreclosure, Sort-of-squatter, Evict?

Question

Hello,

I could use some general advice if anyone feels moved to do so.  I'd greatly appreciate it.

Just closed on an occupied REO.  Auction.com purchase.

Met occupant after closed.  She's only been there 3 months.  No lease.  Not paying rent.  Saw it was vacant, was in a bad spot (couldn't afford $800/mo where she was living), found out owner from neighbors, he allowed her to move in (it was already bank-owned by then).  Said he was going to sell it to her when she got her tax check.  Admitted to seeing legal notices and mail coming, but said she didn't read them and put them in the mailbox for 'someone' to pick them up.  Not sure she has ever met the foreclosed upon owner.

Offered $750 for keys.  That's rather generous in this area.  She didn't seem impressed.  Mentioned that she'd need deposit + first month's rent to get situated elsewhere.  (So, about $1500-1600 in this area).   Said she needs at least 2 weeks to find a place.  I suggested some income contingent apartment complexes.  She wants a 3 bedroom house in a certain school district.  Not gonna happen with her income.  I stayed at $750.

I have a consult with a lawyer tomorrow (should have done earlier, I know.  First time investor, here).  My last call to occupant last night was left open ended, because I wasn't sure what my bottom line should be?  I'm thinking about posting a 3 day notice to vacate on the door.  And, giving her a week from yesterday to get out, or else I evict.  Is that reasonable?

I read law on said topic, and I believe I have a no- wait eviction period, as we don't have a landlord-tenant relationship.  She seems closer to a squatter.

Any and all input welcome.

---

I think I need to decide if I want to be extorted, what her leaving fast is worth to me vs dragging out, and her cleaning out a house full of crap and not damaging the home.  I am picking up an eviction packet at courthouse after work.

Dale Stevens · Answer

@Ross Denman is on point. With Indiana properties that are occupied, I have the eviction paperwork ready when I win the foreclosure. I don't even mess with offering money. Where I invest, the eviction is quick. 10-14 days I have them in court, 6 days later, they are tossed.

Cost me all off about $350 total between court and attorney fees.

I have no sympathy for people, because I find most are just LIARS. Toss them out, move on.

Ross Denman · Answer

We've gone through these things a few times. I just had a "squatter" trespassed from one of our vacant properties a couple of weeks ago. First off, Indiana has no squatters rights. Squatters are handled from a common-law perspective. If a person squats long enough to claim adverse possession there could be a problem, but that person would have to reside in and care for the home for 10 years and pay the taxes on the property during that time. This is not the case here.

We had almost an exact thing happen 3 years ago when one of our clients purchased a foreclosed home and the previous homeowner was still residing in the home. It was pretty straight forward... we offered cash for keys and gave him a 10-day notice. He tried to give us the run around, but we didn't give him too many options. As soon as we filed eviction, he came back asking for the cash. We refused as we had already paid the court fees, etc. He was out in just a few weeks after that.

Point of the matter, Indiana is a landlord friendly state as long as you are being fair (don't intimidate or bully the resident) and following the correct steps. We can usually get a tenant out in about 3 weeks after filing eviction. 7-10 days for the tenant to be notified of the court date and 7-10 days to leave the property after the court date.

Roger Wilson · Answer

Agree with everything above....  bottom line:  EVICT NOW.  Otherwise it will only delay the inevitable....

Spencer Stromberg · Answer

Some states have laws protecting tenants in foreclosure situations. There is also a federal law that impacts the ability to evict a tenant after a foreclosure. Sounds like neither may apply in this case, if she moved in after the foreclosure sale, but I recommend discussing with the attorney you're consulting with tomorrow.

I am not an Indiana attorney, but I know if this were a Washington property, I'd be concerned about labeling this person a squatter. Landlords have a relatively quick way to evict non-paying tenants, but squatters are not tenants, and it can require a more time-consuming and expensive ejectment lawsuit to get rid of a squatter.

Be sure to find out from the attorney how much an eviction costs in your area, including not only attorney's fees, but all of the fees and third-party costs, like process service, sheriff's fees, court fees etc. If you can get the occupant to vacate for about 125% of the estimated cost of an eviction, I would recommend doing so, since it gives you certainty. Here in Washington, I charge $850 plus out of pocket costs, which are typically another $350 or so, for a total of about $1,200. DIY evictions by first-time landlords in Washington almost always drag on for a long time, and they usually end up hiring an attorney at higher cost to clean up the mess; your state may not have such a strict procedure to follow, though.

Here is a suggestion for getting her out and covering your bases, if the squatter vs. tenant distinction is important in Indiana. Consider a short term rental agreement to make it clear the occupant is a tenant, and not a squatter. If she says she needs two weeks, then do a two-week rental agreement. Put in a market-rate rent, but include a waiver of the rent for the two-week period if she vacates by then. Include a provision that if she fails to vacate, the two weeks of rent is due in full and rent continues to accrue until she vacates. Put in the payment to her if she vacates by the end of the two weeks. Include an attorney's fees provision. If you can get this kind of agreement, then your right to evict her will be very clear if she fails to vacate at the end of the two weeks. If she does vacate at the end of the two weeks, you've probably gotten her out in less time than an eviction would take, at least in the states I've handled evictions in.

Kim Meredith Hampton · Answer

@Teri Brown you need to check your landlord tenant laws where the property is located. In Florida , I post a three day notice and then once it expired I move forward with an eviction, they are pretty straight forward when you purchase with a squatter, owner that stayed behind or someone in there with a bogus lease.

PS, I also try the cash for keys, but if that doesn't work, don't wait get ready for eviction

Teri B. · Answer

Account Closed Hopefully someone with experience can chime in, but I didn't involve an attorney because the contract is one-sided, and I'd read that other people had lawyers that warned them it was a bad idea, or declined to represent them.

The closing took 2 to 3 times longer than 'normal', and it was frustrating.  There is still another unresolved issue, also.  A house would have to be a steal for me to try this again.

If I could do it over, however, I would have met with the attorney before closing so, at least, I knew my options and game plan before knocking on that door.

Account Closed · Answer

General related question - if considering buying a foreclosed auction.com property, what's the best way to involve your attorney from the start?  Especially if buying an occupied foreclosure from auction.com?

Teri B. · Answer

As a follow-up - wow, it's been 6 months already!  We ended up giving her $750 to relocate.  The circumstances inside the house were unsafe (my goodness, how they were living), and honestly, I was worried something was going to happen and she needed to go.

It would have cost 650 to evict using a lawyer, but he also suggested I just go down and file myself for a few hundred bucks.  The whole process would have taken 2-3 weeks if I recall . .  but, I'm not quite sure that she's a legal resident and I was certain that she was working 'under the table' at a local restaurant.

All in all - I think she was out in 8 days.

I'm with @Roger Wilson on this one - it was an amazing (stressful) education and I'm so much wiser because of it.  I really appreciated all the guidance offered here.  Thanks.

Roger Wilson · Answer

It's amazing the education that you get from going through this a few times.... ;-)You will soon know what to look for, how to prepare, and exactly how to act to quickly protect your investment.  Fortunately (for us old-timers), many who go through the heartache the first time - never go back because they don;t want to get kicked in the gut again.Stick with it!  The education you are gaining from this will pay off in the long run!

Teri B. · Answer

@Mindy Jensen  I'll do exactly that tonight - a sit down is a great idea.  Indiana is pretty 'hands off' (not like what I read from some people in places like Cali), but I'll verify that with the lawyer.

Foreclosure, Sort-of-squatter, Evict?

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