Seeking legal advice - purchased a property from scammers

[Dor Sarig]

Hi everyone,

Long story short, my partner and I purchased a home in Cleveland but unfortunately now we are facing a problem. I'll explain the situation:
We found out that the seller of the home forged documents indicating that the current tenant, who used to own the home, was paying $950 in rent each month. Last week our property manager told us that after talking to her (the tenant), she revealed that she hadn't paid any rent in months, except one payment of $500 (she also provided us with the receipt she received from the sellers). Ultimately, she is most likely unable to pay the rent we were expecting.
Not only did the sellers give us the wrong impression, they provided us with a fake history of payments dating back to July, and a forged receipt of payment for the month of October. They also provided us with a lease agreement signed by the tenant agreeing to pay $950 a month. She told our property manager that she was coerced into signing it. We are looking for advice on how to proceed with the sellers, and what our rights are in this situation. 

We have all the documents the seller forged in order to trick us to sign on this deal, since they knew we wouldn't sign otherwise. 
Beside proceeding with eviction, what would the best-case scenario look like for us legally?
Have anyone encountered such situation before?

Thanks,

Dor

[Robert Matelski]

Originally posted by @Dor Sarig:

Hi everyone,

Long story short, my partner and I purchased a home in Cleveland but unfortunately now we are facing a problem. I'll explain the situation:
We found out that the seller of the home forged documents indicating that the current tenant, who used to own the home, was paying $950 in rent each month. Last week our property manager told us that after talking to her (the tenant), she revealed that she hadn't paid any rent in months, except one payment of $500 (she also provided us with the receipt she received from the sellers). Ultimately, she is most likely unable to pay the rent we were expecting.
Not only did the sellers give us the wrong impression, they provided us with a fake history of payments dating back to July, and a forged receipt of payment for the month of October. They also provided us with a lease agreement signed by the tenant agreeing to pay $950 a month. She told our property manager that she was coerced into signing it. We are looking for advice on how to proceed with the sellers, and what our rights are in this situation. 

We have all the documents the seller forged in order to trick us to sign on this deal, since they knew we wouldn't sign otherwise. 
Beside proceeding with eviction, what would the best-case scenario look like for us legally?
Have anyone encountered such situation before?

Thanks,

Dor

I'm going to field a guess that the house is a 1080 sf 1940s cape near the intersection of Lee and Miles in Cleveland, and that you paid a whopping $28K for it. Assuming I am right, $950 is not a realistic rent for a house like this in a location like this. Some basic due diligence surrounding rental comps should have sent up some major red flags and caused you to quadruple check before proceeding. A name like "A-Z Auto Sales" should have sort of been a red flag too. Honestly, I would not even bother with pursuing the seller... it's unlikely that you'll ever recover anything, and it will just be a time and energy suck.

You need to register the rental with the city (and pay a fee) and with the county (no fee) first off. Then provide the tenant a 30-day notice that indicates the terms of the rental going forward (probably would be wise to set the rent at a reasonable amount rather than $950). If the tenant so chooses to remain, they will have to pay rent and abide by your rental terms. Otherwise they are free to leave. If they stay and don't pay, serve a 3 day notice on day 31, then file for the eviction on day 35. Once the tenant is out, prepare to spend a hefty sum to get the house back in order and rent-ready. Or make it look really decent and make sure it will pass an FHA inspection so you can market it for sale to first-time-buyers in spring of 2020... you might actually achieve a decent gain from that. (DISCLAIMER... I am not a lawyer and this is not legal advice... it is just what I would personally do in a situation like this.)

A property that I bought in 2015 had a non-paying tenant in one of the units (it's a duplex)... was a short sale and the seller was a hot mess, so I figured there was a good chance of there being drama with the tenants, but I proceeded anyhow because it was an outrageously good deal. Turns out one of the tenants was paying, and one had not paid in ages. About 2 months into owning it the non-paying tenant ended up leaving on her own once she realized she could not stay for free anymore (eviction was about to be filed). Spent $5K on a rent-ready redo of the unit after her departure (I got off lucky), and it has been performing solidly since then.

Oh yeah, also... closing thought: Your situation is one of the many reasons why I generally only buy properties listed on the MLS, with licensed brokerages, rather than pursuing "hot off market deals"... there is a lot more accountability and credibility when someone's license is on the line.