Sellers want to stay in property past the close date on potential rehab

[Cornelius Charles]

We are in negotiations on a property in Santa Barbara, California where the sellers want to close in ten days, then stay in the properties as "renters" until October 31st.  We calculated the associated costs with this into our offer, so that is accounted for.  We have until Monday evening to decide whether to go through with this or not, but the more we talk to others about this, the more it is sounding like this is a bad idea.  My partner has gone through the eviction process in California, so she is aware of what steps need to be taken.  However, since we will mostly be using hard money for the purchase price, the amount of time they are in the property past October 31st is a lot of money out of our pocket.  We will be in constant contact with the sellers agent until Monday to see if any deal can be made to get them out of the property as soon as possible. If not, we will probably walk away from the deal to avoid the risk of them intentionally staying past October 31st and forcing us to go through the eviction process.  Besides negotiating with the seller's agent, we are also investigating if other funding vehicles are available that we could use to pay off the hard money loan and have a more reasonable interest rate to help lessen the financial burden of them being in the property should an eviction be necessary.  Does anyone know of any other ways that we could mitigate or eliminate the risk of them not leaving prior to the October 31 deadline?  Since we are in Southern California, we do not want to be one of the horror stories you hear about pesky tenants. Thank you in advance.

Cornelius

[Mark B.]

CA allows for a security deposit of 2x rent for unfurnished and 3x rent for furnished. Are they collectable? I would ask an eviction attorney how long evictions take in the area, figure out how much that is going to cost you, subtract out the security deposit and decide on the net if it would be worth it. Since you are getting a hard money loan I'm guessing that you are doing a major rehab anyway so damage, while potentially a major issue, may not be as great.

Why not hold closing later?