Need advice for a weird situation with a property sale gone bad

[Karl Kaeser]

Hi!  I'm looking for some advice on a situation I am in with one of my rental properties.  Here's the background on what has happened so far...

In August 2018 I had a townhome flip that was completed and we got a cash offer for full asking price with waiving the inspection.  The buyer asked if they could close in December 2018 but move into the property in August after the purchase contract was signed and they would pay $500/month rent until they closed in December.  We were happy to get the full price offer and were okay with them moving in, so that is what happened.  They paid each month and when December rolled around they said that they couldn't close due to the TRUST that was going to pay for the property required repairs needed to be made before the trust would approve the purchase.  Okay, weird... but they waived the inspection so my lawyer pushed for the sale to still close.  They keep coming back with excuses on why they can't close and offer to do the repairs and pay for them so we can close.  I agreed to this.  (They wanted to replace the deck in the back with a paver patio since they claimed the deck was unsafe... not true, but I'm getting a new paver patio and full asking price so we said okay).  I asked them to now pay market rent of ($1500/mo) going forward, since they didn't close per the original contract and they agreed.

Fast forward to September 2021 and they are still in the property, and paying rent each month of $1500 and STILL refuse to close for more and more reasons that always seem to come up from them.  The house was a full rehab in 2018 and everything was in great working order, but the list goes on of what they 'need to fix' in order to close

-had to repair plumbing issues

-had to replace windows

-had to fix a leaking front door? wtf

-had to replace deck, etc etc

So I don't trust these people at all, I think they're definitely lying about intending to close, however they're paying market rent and the property is cash flowing $300/mo so it's not the worst situation.  I don't want to provoke them too much since I can't evict them now due to covid if they decide to just stop paying rent.  We don't have a rental lease agreement, just the original contract from 2018 that is a normal purchase and sale agreement with an addendum stating they can live in the property for the 4 months prior to closing.

So my main question is what should I do!!??  Also the property is now worth around an additional $20k since prices have been going up.  If I try to evict them so I can sell, I'm not sure what will happen about the money they invested into the property so far which I estimate to be around $6,000.

Does anybody have any suggestions?  Can I just void the contract from 2018 and renegotiate another one?

Thanks for your help!

Karl

[Greg M.]

Sounds like you have an attorney. I'd ask them, not random people on the internet. The fact that you let this drag on for 3 years is mind blowing. 

I have no idea what their game is, but I'd be very worried. What are you going to do when they try to close on the 2018 contract and deduct "$30K" in upgrades they did while you owned the place? You say it was their choice and their attorney screams unjust enrichment. And no lease agreement? Maybe they call those $1500 monthly payments toward the purchase price and not rent...

It is very possible the 2018 contract is still valid since neither of you cancelled it and they have been paying rent under the assumption the original contract will get executed at some point.

If you're happy with it as a rental, have them sign a lease and a contract stating that previous sale agreement is void and any repairs/upgrades done belong to you and no reimbursement is due to them.

If you want the place sold, expect hell from them if you try selling it to anyone else. Sorry, but you brought this upon yourself.