Buyer Does Not Want to Inherit a Tenant

[Austin Joseph]

Hi everyone,

I'm in the final stages of closing my first wholesale deal but my buyer has presented a problem that I'd need to solve and I'm not entirely sure how to go about doing so. To make a very long story short: there is a tenant currently in place in the home that had signed a rent-to-own agreement in 2010. This original contract expired in 2015 and stated that if the tenant could not provide the funds to cover the agreed upon purchase price then they would be ordered to vacate the home. She did not fulfill her end of the contract but she has now been on a verbal lease agreement with the owner since 2015  to continue renting the home, but without the ability to eventually purchase it. The tenant has been cooperative throughout my communication with her and I informed her early on that the status of her staying in the home is up to the eventual buyer. This is where my buyer comes into place; I have a gentleman that is extremely excited to purchase the home and he even drove an hour to my office today just to give me proof of funds for the purchase. However, he's not a typical investor so I'm having trouble explaining the tenant situation to him. He plans on purchasing the home as his personal residence and fixing everything himself so he can eventually sell the house for a profit later down the line. The problem I'm facing is that he refuses to sign the assignment of contract until the tenant has been notified and has agreed to leave the premises. I'm almost certain that I am not authorized to send out the official letter of notice, but my concern is that if I ask the seller to do so she would say no due to fear that the buyer may not close on the house and she would be left with a mortgage and no tenant. I've considered restructuring contracts but this is a hurdle I did not anticipate so I'm open to any suggestions.

Side note: my contract with the seller ends April 18th

[Patricia Steiner]

Actually, I think the buyer is pretty smart.  He's buying the house - not the house with the a "verbal lease" occupant who did not fulfill her contract four years earlier.  Why should he step in that when he's buying the property as his personal residence?

The seller has the "verbal" and long time relationship with the tenant. The respectful thing would be for him to let her know the house is in the process of being sold and when it is, she will need to vacate on/before the closing.    

As an investor, I would not be interested in purchasing a property with a "verbal lease" in place.  That verbal is between the seller and the tenant - not with the new owner and her.  As a Broker, I represent my client's interest and you can bet the farm that I would be placing an Addendum in front of the seller to sign and selling him on getting the deal done.

You can find another buyer but intelligent investors know that what you let slip by to get a deal done - will come back to bite you good after the close.