Seller Won't Service Notice to Vacate (FHA Loan)

[Meredith L.]

Hello BP Community -

I'm currently in escrow on a 4plex with an FHA loan for 3.5% down. The 4plex is currently fully occupied and the stipulations of my loan state that the Borrower (myself) must be able to occupy within 60 days of signing the loan docs (promissory note and deed of trust).

This implies that the Seller would need issue the 60 day notice to vacate to one of the tenants since I would not be able to wait until the deal is closed. All tenants have been living there over 1 year and are on month to month leases. We decided to issue an addendum to the Seller that states the Seller will send a 60 day notice to vacate for the unit that the Buyer (myself) intends to occupy, after removal of all Buyer contingencies. 

The Seller is refusing to serve any type of notice to the tenants. My agent has told the Seller's agent that the Seller could even choose whichever unit to request to vacate.

Does anyone have any advice or creative ideas for approaches we could take to either: 1) get the Seller to comply with serving 60 notice to vacate to one of the units or 2) Any other loans with low down payment options for a 4 unit property? I could potentially put 5% down. 

Help!! Thanks everyone :) Worried the deal won't go through...4plexes in California are hard to come by.

[JD Martin]

Sure. Tell your agent you're going to pull the plug on the deal. If you have an agreement by all parties that the seller is going to boot one of the tenants, and they won't do it, they are in breach of the agreement, and it is null and void.

If you don't have that agreement in place, signed by all parties, then you either have to change loan course or walk as is. 

Most sellers will not want to kill a deal over trivial items. Issuing a notice to a property they won't own 2 months from now is a trivial item. HOWEVER, the seller may have doubts about your ability to conclude the purchase. If that is the case, an addendum for some kind of damages should you not close would be appropriate, since the seller is taking the risk of losing revenue.