Lee, I also invest in Birmingham. We should link.
If it's a lease option, the down payment is non-refundable and gives the tenant-buyer the option to buy the house within a specified amount of time. The deed still remains in the owner's name, and the tenants are essentially renting the property. They don't have any ownership stake.
If the tenant-buyer exercises the option, the property is sold to them at the agreed upon price, and the deed is then transferred to the tenant-buyer. Given that they never exercised the option, they should only be tenants. By not paying, they have breached their rental contract, which is grounds for eviction. Had it been seller-financed, they would already have the deed. In that case, he would need to foreclose on the propererty.
So, I agree with advice given previously- ask the owner to seller-finance you the deal on terms, get the deed in your name, and get the tenants out the property. You can evict them, but another option is giving them cash for keys of maybe $2k. I would tell them they aren't owed anything, and that's how much it will cost to evict. So, you can either use that money for a lawyer to evict them, or they can have that money in exchange for not ruining the property even more on their way out. The choice is theirs.
Keep us posted.
