How to probably handle current remain in Short Sell Transactin

Question

Hi,

I am purchasing a short sell property in Santa Clara city, California, current tenant might stay after transaction, what is the best way to deal with it? he currently does not pay rent to the seller, can I start new lease with him? what if he does not meet my criteria, can I ask him to move?

Thanks in advance for advice...

Account Closed · Answer

If you are in CA I say don't close until the tenant is gone.  Or use it as negotiating point to lower the price.  The advice on this thread is not specific to CA and some of it is downright inaccurate.  A sitting tenant in CA who has not been paying rent is not necessarily in violation of a lease.  Depending on how long the owner has accepted the non-payment and did not attempt collection, it becomes "customary" and "acceptable" and CA courts have upheld such tenants' occupancy rights.  Hopefully this tenant is ready to leave and not a legal eagle.  :)

Find out if there is an actual lease in which the tenant is in violation.  The lease should have been submitted to you and escrow and rents would be pro rated if this was a paying tenant.  CA law for termination of vacancy for month to month tenants who have occupied for over 12 months is 60 days, and has been for several years now.  Federal law is now 90 days per the fed. tenants in foreclosure act, which trumps state law.  Like I said, if you close with that tenant in place, you would be betting that they weren't trying to work the system and play you.  You are in the Bay Area and if it were me I would not dream of closing on that prop with a tenant.  And I'm experienced with buying props with bad holdover tenants/squatters!  I do not know if there are any rent stabilization or controls in SC county or moratoriums on evictions in your county but I would check into it asap.

Don't worry about offending the agent.  It is normal to require the prop to be vacant.  Tread carefully if you choose to close with the tenant/squatter.

Joan C. · Answer

Good advices, It definitely is my best interest to acquire the property w/o the tenant... it would be stressful that I would have deal with eviction for my first rental property.

there is no rental control where this property is located..

Joel Owens · Answer

Are you trying to rent this out,flip it for resale after cleaning it up,or live in it yourself??

Joan C. · Answer

Thanks everyone for the valuable inputs..

In my purchase contract, there is no indication that tenant will remain, but since I use dual agent, the agent and tenant know each other, my agent mentioned verbally that tenant would like to stay, and she advise tenant not to pay current owner (seller) during the short sell process..

I would like seller to vacate the property at closing, but since there is connection between my agent and tenant, I am not sure how to proceed while not offend my agent.

Lokesh W. · Answer

I've had this situation 2 times. In one foI've had this situation 2 times on properties that I was doing short sale on. In one of them the non-paying tenant was prepared to leave.

The other one had a non-paying tenant who wanted to purchase the property so he was very difficult and intimidating to us when we visited the property. Even the owner lady was intimidated by him. We asked the current owner to send eviction notice. Until the sale is complete, the defaulted owner is still the owner so he/she can evict the non-paying tenant. Some people suggested that we put a clause in the offer to purchase that the sale is subject to removal of the non-paying tenant but we did not have to do this. A lot of times, the eviction notice itself make the tenant to cooperate and there won't a need to actually evict.

Joel Owens · Answer

California is a very tenant friendly state.It could take awhile to get them out.

If the tenant had a long term lease in place and can show the judge they put that payment in a bank account each month but didn't know who to pay the judge could enforce the lease on the new owner.

The reality is very few tenants do that and just say since nobody is contacting us we will just spend the rent money.

Whether it is month to month or not it will take you months or longer to get them out.Whether you pay eviction costs,cash for keys,etc. the tenant is just going to move for the heck of it.It costs money to move.

With cash for keys you get them out today instead of months of lost time.Your strategy will depend on what you are trying to do with the property.

Monica Breckenridge · Answer

While it is true that even if a house forecloses or a homeowner sells their house that the lease stays in place.   You said one very important thing.  The tenant is not paying their rent.  The tenant is now in default and  you do not need to honor the lease.  This only applies if they are not defaulting on their lease.  I would not recommend renting to somebody who hasn't been paying rent.

Townsend Derick · Answer

In most states if the new owner is an investor, he/she must allow the tenant to fulfill the remainder of their lease. If your tenant has no lease then he/she is considered month to month and only requires a 30 day notice from you. They may not leave but that’s the law. I would check with a RE attorney in the area because they will know the local or state laws for the area the subject property is in.