Seller signs new lease before we close.

[Jason Miller]

I am under contract for my very first deal. It is a 4-plex in Arkansas. Two units are occupied with the remainder of their one year lease. The other two were being remodeled and empty when I went under contract. I just found out the seller agreed to a new 2-year lease without telling me. I have no idea how they screened and the monthly amount it still lower than what I planned to ask. 

Do I back out? Do I ask for a reduction in price? Do I continue of the cash on cash return is still within my limit, albeit smaller?

Thanks!

[Joe Splitrock]

Did your purchase contract state that two of the units needed to be delivered empty at closing? If not, the seller is within their rights to lease the units. I sold a duplex several years back and had a similar thing happen. I released the unit thinking I was helping the buyer and also did it to avoid a situation where the sale fell through and the unit sat vacant. I am not sure you have legal ground to back out or negotiate price, unless your contract addresses the vacant units.