All Forum Posts by: Mijeong B.

Hi. We are in a very difficult situation and hope someone can help.

My husband and I have just started investing in real estate in St Petersburg and this is our first flip project.  Currently we are under contract expecting a closing some time this week .  Yesterday my husband was driving by the house and found that a woman (with two kids) were moving furniture into the house. Of course, my husband was puzzled and asked what's going on. The woman said that she rented the house from somebody named Juan Garcia (which sounds like a random name) and paid $1,250 to him and claimed that her husband had the lease agreement.  But her husband was not there on the property. At first, my husband thought that they were victims of some sort of rental scams. 

When my husband informed the listing agent of the situation, the agent went to the house and changed the lock while those people were out of the property (There was no utility service connected as of yesterday). The woman called my husband last night and complained that she was locked out of the house while her personal belongings were in the house. My husband told her that there was nothing he could do, as he was not the owner of the property. We though that it was the seller (the bank and the listing agent)'s responsibility to handle the issue. 

Surprisingly, however, the listing agent informed our agent today that he would not deal with the situation, so our  agent and we should take care of the squatters. The listing agent's argument is that because the status of occupancy on the contract is "occupied" (the property had had tenants but they apparently moved out about 2 months ago), they are not responsible for the squatter problem. We think it is so ridiculous that the bank and its agent put all this burden on us, even though we do not own the house. 

We are considering walking away, but the problem is our earnest money deposit. It seems clear that the bank will refuse to return our money back based on the fact the contract has the "occupied" status. The squatters are not occupying the house now, but their belongings are still in the house.   What's the best move for us? Can we get the earnest money deposit back if the bank does not vacate the squatters' belongings? 

So what has the "tenant" said? And is the furniture company coming to pick up the furniture? 

 So at this point the property is locked, with no one living there, no utilities on, and simply some rental furniture inside, is that correct? 

There are all sorts of different issues here. Are you buying the property via short sale from "Mr. Smith" the former owner, or "Bank XYZ" who has foreclosed on the property? If you are buying from "Mr. Smith" then Mr. Smith could have written these folks a lease that would in fact be valid in most states. If you're buying from Bank XYZ, then they were scammed by someone who wrote them a lease. Either way, you agreed to purchase the property as occupied. If they have a valid written lease, you have to honor it unless it would be proved invalid. Again, you should contact an attorney to help you. 

Not legal advice: close on the property and offer the people their $1200 back in exchange for a hold harmless, and everyone just moves on.

Bottom line - CALL AN ATTORNEY! 

just curious, does the city/township require a u&o/co for the house to be lived in before settlement?Utilities on ?

I had this happen before, the house I was purchasing was not deemed habitable, and I had a conditional co to fix the repairs-- once I knew there was someone trying to squat(before we started work) I called the township and they had the sheriff kick those scumbags out since the house did not have a u&o and no one was permitted to live in the house until I was finished rehabbing and the house was properly inspected. 

@Mijeong B.

You agreed to purchase an occupied property. The property is occupied. I'm certain the contract you signed says the seller has no idea if the property is occupied and if it is occupied it's your responsibility. I don't see how you have any recourse in a court of law. Consult an attorney for more info and stop taking matters into your own hands before you get sued and/or lose a large sum of money. 

Based on a situation I am in right now that is difficult to discuss due to litigation, I would not tender funds at closing until everything is moved out and the house is completely vacant. Right now its not your problem (and you would be able to get your EM back eventually). The second your check hits it is your problem and a much bigger problem than you may think. Get every single item off the property before you close or you could potentially have some real issues. I know first hand....

Ahh, reminds me of a recent story that I was just told by one of my funding investors.  See he himself tried to go out and secure a property in Brooklyn, paying 600k+ for a would be empty town-home (or atleast at the time he did a walk though without me).  Little did he know that NY has the most FN ridiculous tenant laws / squatter laws.  He offered them 10k last night and they laughed in his face, saying its going to take years to get me out of this mansion.  

Even if you do lose your EMD, its still a cheap LIFE lesson.

Perhaps the people rented the furniture in order to establish domicile and squat at the property for free rent?

 Yes!!! The agent will call the police. i will update later.