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Updated over 6 years ago on . Most recent reply
Purchased property with existing tenants; Tenants not paying rent
Most Popular Reply
Potential lessons learned - 1) Always review the HUD-1 closing statement carefully to make sure that security deposits and rents are being prorated properly toward settlement costs 2) Ask seller at closing about the payment history of the tenants and inquire if payments are current prior to signing closing documents (I need to remember this one)
You should have started the eviction process already. They are obviously professional renters.
I suspect they are pulling your leg and probably haven't paid in a long time.
Hire a lawyer and file for eviction. Don't do this yourself, as you seem to be in over your head. You only can collect rent from the day you own it, but your lawyer will advise further.
At closing there should be something on what you are buying and what prorated rent for the month you received. If you were current up until closing then he already took the loss on the back rent. Now if you had to pay their back rent and were expected to get it from them it is a different story (I have no idea who would have agreed to pay months worth of back rent to the old landlord waiting to collect). Now if he ate the loss then what do you care, let them start over and start filing your evictions from the first day you took over.
I guess I don't see how if you have owned the property for a week that you are owed months of back rent unless you paid the seller for it.
- Mike Cumbie
Congrats on closing on your first investment! Missed rent when you didn't own the property is not yours. Missed rent after you close is your problem. You should keep going with the eviction for sure. Make it swift, make no exceptions and show them that you mean business from the jump. I wish inherited tenants weren't always a pain in the ***, I've had 1 or 2 that were the exception to that rule, but on the whole, if it's not this, it'll be something else. Best of luck to you.
Potential lessons learned - 1) Always review the HUD-1 closing statement carefully to make sure that security deposits and rents are being prorated properly toward settlement costs 2) Ask seller at closing about the payment history of the tenants and inquire if payments are current prior to signing closing documents (I need to remember this one)
Sounds like the previous guy took the lose.
@Brian Olencki Wait wait wait wait wait.....
You just closed on your property a week ago. How is it that the current tenants owe you anything but October rent (it is only October 2), and how is it that you can file for eviction from rents that were never due to you on a property you didn't own at the time? How are you giving them a 5 day pay or quit notice on the 2nd of the month?
If you didn't receive prorated rents for September from the seller, then he either owes you that money or it was never written into the contract and he doesn't owe you anything. Again, that has nothing to do with current tenants. BTW: I hope the seller also paid you their damage deposits.
If the tenants are on a MTM lease, then they currently owe you October rent, and nothing else. Yes, you could have served them 30 day notices for lease termination already, but they would still only owe you for October rent.
Have you talked to them and simply say to them, starting today I am your new landlord, and any past missed rents they will have to deal with the prior owner? Although, I do agree with the termination of their lease. And, in the future, when dealing with a MTM tenant, simply have the seller terminate their lease and deliver you the property empty.
@Brian Olencki I would talk to an eviction attorney, but personally I think it is too soon to evict if you closed in late September and it's only October 2nd. Assuming rent is due on the 1st, and that they don't pay you October's rent, I believe you can't send a 5 day demand letter until the 16th (17th would be safer).
They may be professional tenants, we don't know. You can only start dealing with them yourself, as of the date you owned it. If they were professional or difficult tenants, you should have found that in your due diligence process and either asked for the units to be empty (better) or ensured you got a good enough deal to compensate you for dealing with the problem. Hopefully you at least got a copy of the leases so you know what you're working with, who to evict if you need to, etc.
As others have said, you don't inherit missed rent, rent for the month of closing is (or should be) pro-rated on the closing docs to the date of closing. Everything before the closing date is the former owner's responsibility, everything after is yours. If the former owner can get the rent for the time he owned it, it belongs to him, but as a practical matter he has very little leverage with the tenants now (he's no longer the owner so he can't evict) so he should just mentally write that off (and so should you, since any rent covering the time before you closed was never yours to begin with).
I would have suggested just starting fresh with these people and explaining that there's a new sheriff in town, laying out the rules, saying you're tough but fair, etc. You may have already burned that bridge with them by sending out notices to start with, but on the other hand, it might be likely you don't want them anyway and maybe sending the 30 day notice of termination when you did was good (especially if you sent it prior to 10/1).
I would have an eviction attorney's contact info in your phone as it sounds like you will more likely than not need it, but personally I wouldn't proceed with the 5-day until the 17th. If I were you I'd put the eviction attorney on speed dial, get copies of the leases and your deed together (the attorney will want those), and see how the next 2 weeks go with these people.
Given the fact that you just began ownership of the property, you can not formally issue a 5 day demand until the 16th day of the month. Technically, in the eyes of law, you will not have the ability to take action until that date. The previous owner's rent or lack there of is not a factor in you collecting yours. Have the 5 day ready to go on the 16th. Make sure it is mailed and posted that day. Pictures always help. If they do not make the payment from there, you should most likely have a court date 9 days following the conclusion of the 5th day. Best of luck.
Don't mess around with it! Lawyer up. Do not change the locks or anything else like turn the water or power off. You could get in big trouble. It is tempting BUT DON"T DO IT!!!
Let the legal system work.
I will speak to a lawyer as you just closed and they owe you October rent for now. The lawyer will be able to provide details of when you can evict. Treat this as a business and be more strict with your tenants. This is a business at the end of the day and don't let them give you b.s. You can ask the lawyer you used to close on this property. Best of luck.
@Brian Olencki Congrats on your first property! I've unfortunately had to turnover a few tenants in RI in similar situations, i.e. bad previous landlord mismanaged and developed bad habits or just got bad tenants to begin with. You'll spend 3-6 months and a lot of pain to only end at the same conclusion, which is you want to screen your own tenants.
I'm curious, what part of RI is it in?
Hi Brian,
I'd ask for evidence of tenant paying on time each month (bank statements, e-transfers, etc.) and speak to a tenant before purchasing a place with an inherited tenant unless the offer price was a really good one.
Talking to the owner about the tenant, its possible they hide anything bad about the tenant especially if they're a non-paying one.
You would be owed rent from the day you took possession of the property.
