About to close on property, seller's lied about rental contract

[Richard Singh]

Hey guys,

I've reached out previously on some reno related questions on what was up to this point a smooth process.

Recap: I'm buying a 2 family in Guttenberg with an existing Section 8 tenant that was presented as month to month. Goal was to submit 60 day notice. 

Update: I found out the week of closing after finally getting a lease agreement from the housing authority that the tenant is actually on a year lease ending in February. The tenant is paying about $800 under market value, and slows down my plans for renovation. My realtor's firm represents both buyer and seller. When asked for a lease, the seller's lawyer and realtor dragged it on and only sent HAP voucher details, but never a lease. We continued to ask but it was not presented, and somehow it just got skipped over and we went on their word. I clearly see my mistake in due diligence, but I give myself a pass since I assume this was my realtor's or lawyer responsibility to advise me here. 

So my question is, where did I go wrong? Who's responsibility was it to confirm lease? What should I expect from a lawyer and realtor?

I've lost a-lot of trust in my realtor and their firm - and also my lawyer - but I do know at the end it's my responsibility. Would love to hear your opinions for future deals.

[Kim Knox]

@Richard Singh

Section 8 is tricky, and YOU should call them directly specific to this purchase. Ask them 1. If they have done a rental valuation recently, as you are limited to keep within a certain percentage of the market value rents. 2. Are you obligated to continue to lease? (I think in the 1st year, yes. Perhaps the next year it could be different). Don’t blame your Realtor or the attorney, section 8 would likely need the Seller to request contracts). You might have to get a letter of authorization for such questions to be answered. You might have to extend your diligence period to satisfy your questions.

Tell Section 8 your plans and tell them your belief that it is under market rent by $800 a month, that is the best way to get the info you need to make a smart decision. Otherwise, depending on competition, you might be able to split some of the rental loss with the seller, in light of your discoveries. That is, if you made these things a part of your due diligence in your purchase contract.