What is considered an actual rent receipt per Purch Agrmt?

Question

Hello!

I'm under contract for a home and in the contract we have language "seller to provide monthly rent receipts" since we are planning on inheriting the tenants.  The sellers have sent over a copy/paste from Zelle showing that the tenants paid, but for about 5 out of the past 12 months they stated the tenants paid in cash.  For those cash transactions, he sent over a copy/paste from his Wells Fargo statement - see below.  I've removed the reference number for privacy purposes just in case.  Now, maybe I'm crazy, but I'm pretty sure you can't deposit cash via mobile right?  Lastly, if I wanted to walk away from the deal, given that the above documentation mentioned was received, would that suffice in terms of the agreement technically being unfulfilled and I would be able to cancel the agreement?

From the seller:

Here is the best I can do.  I can't get receipts but this is C&P from my WF statement.  The totals reflect the rent, as well as other checks or cash that I was depositing.

05/06/20

MOBILE DEPOSIT   : REF NUMBER :XXXXX open dialog

$3,052.90

Also just for reference - I'm not just being a jerk and changing my mind and looking for a way out.  I've just recently found out additional information regarding what the seller stated the current tenants were paying vs. what they're actually paying so I'm trying to find solutions but also want to explore all options in case I need a way out.

We're planning on seeking out an attorney once the Holidays are over but of course I had to get this off my mind on here to see if anyone had insight.

Thanks!

Shan

Kyle J. · Answer

Chances are, the seller is not going to get the current tenants out prior to closing. In fact, if I had to guess, it’s probably why he’s selling (i.e. tenant is “between jobs due to COVID”, hence he probably can’t evict her).

In any event, as to why to do the estoppel, it’s to confirm the CURRENT terms of the tenancy. Sounds like things have changed since the lease agreement was originally signed and he’s now giving her some kind of rent discount (either $1100 due to her reduced income or $1000 due to the inconvenience of the showings, it’s not clear).

Either way, assuming that was done verbally, the original lease wouldn’t reflect it. You’d need an estoppel to effectively get that info.

And yes, they could lie on an estoppel, but at least you’d be clear on what the CURRENT terms of the tenancy are as they alleged them to be, and then the buyer can make an informed decision on whether or not to proceed to closing.

And if you do close, you get to hold them to whatever they said on the estoppel because it’s presumed to be true AND binding on both the tenant and landlord. (Reference: Estoppel Certificates)

I see no reason not to get one. There’s no disadvantage for the buyer.

Steve Morris · Answer

I guess you can get some sort of stipulation (aka estoppel) signed by the tenants if that'd help you sleep better.

In OR, don't usually do estoppels on apartments, so don't know what's usual/customary where you are.

If you really don't want the tenants, make the seller remove them by close.  You lender prob won't like it though.

Steve Morris · Answer

Only thing with estoppels, if they're lying about rents, why wouldn't they lie on an estoppel if you don't trust either one?

Suppose it'd give you some more recourse, but sounds like asking tenants to leave by close is better.

Filipe Pereira · Answer

If this sounded any more fishy I would say you're swimming in an aquarium, @Shandrea Tanglao. The fact that the tenants are already non responsive / communicative is probably all you need to know moving forward. I wouldn't be expecting many changes AFTER you close - not for the better at least. From 1,100 to 1,700 is a big jump.

See if your lender would care, first. If s/he doesn't bite the bullet now. I'd rather spend the money on the reno and know what I am going to get rather than buy the property and have to deal with a month to month non paying tenant followed by an eviction.

Trust your gut. Estoppels don't mean much if tenants aren't willing to honor the terms. All it's good for at that point is more paperwork for the eviction.

Kyle J. · Answer

Both the seller and the tenant sound a little “fuzzy” on the terms of the tenancy. I would request an estoppel certificate be completed to clarify exactly what the terms are, and the current rent amount is. Doesn’t seem like anyone knows ($1,100 vs $1,700 for rent would make a big difference).

Grant R. · Answer

@Shandrea Tanglao Great question and discussion.

Official rent receipts can't be expected from mom and pop or smaller local landlords.

For the other challenges, I would recommend going back to the big picture.  If the property itself is a good deal based on the local market, everything else can be overcome.  The exception would be if the seller is displaying regular dishonest or otherwise questionable behavior; that could be a sign that they would try to change the underlying deal.  I wouldn't worry as much about tenants or rent amount discrepancies as these are things that you can control after the sale.  Best of luck with this one!

Shandrea T. · Answer

@Filipe Pereira The mobile deposit amount wasn’t even the exact amount of the rent, he said that the deposit also included other checks when he did the deposit.  I did reach out to the tenant and she asked if the seller told me what they we’re currently being charged, which worried me a bit.  I replied asking more details but she hasn’t gotten back to me yet.  On the excel file where the seller listed the rents he put the last two months at $1,100 instead of $1,700 which he said he was charging the rest of the year and that’s also what was advertised in the MLS listing.  He said the $1,000 was at a discount because of the inconvenience of showings.  Now that I’m finding out one of the 3 lessees is no longer there and one of the tenants is between jobs due to covid I’m starting to figure out an exit plan if I need it since it means only lessee is employed now.  I did also ask if she was getting unemployment or any type of government assistance and that I could try to help her look into it if needed, but no response.

I’m very confident about finding better tenants, but the caveat is that it would need a MAJOR refresh and I was hoping to not have to put all that money in right away.  I did prepare for this so we could definitely do it if needed though.

I’m sort of leaning to bite the bullet and kick them out depending on how honest and communicative they are with me, since if we can figure something out with the tenants I’d prefer that option since I don’t like the idea of having to kick them out.

Filipe Pereira · Answer

I don't know wells fargo's system well enough to know what they consider a "mobile deposit" but if what he reported he is receiving is different than what the tenants are actually paying @Shandrea Tanglao then that is probably enough for you to keep your deposit and back out.

If you have concerns about the tenants that are there, you can ask the owner to have them vacate as a condition of sale, but at the same time, he could tell you to go pound sand and back out of the deal. Plus - how confident are you that you can find better tenants?

Shandrea T. · Answer

I also worry about if we don’t have them vacate now if we’ll have a hard time getting them out later due to the pandemic.  I also know that I need to be business minded about this but I also feel guilty having them vacate with everything going on.

Arlan Potter · Answer

@Shandrea Tanglao

You might be better off with your own tenants

What is considered an actual rent receipt per Purch Agrmt?

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