Real Estate Question

[Targa Me]

Any attorneys in the room? (or anyone with related knowledge)

I'm looking to buy a house (primary residence).
Currently the property has renters living there. They are to be out by the close of escrow.

Do I need the renters to signs a document stating they will leave the property at the close of escrow or will the Clear Walk Through prior to the close of escrow be sufficient? In other words, after the walk through, if they're not gone, I'm not signing closing documents.

Your input is greatly appreciated.

[Rot 911]

You are a wise man. If they refuse to move out after closing, you have to go through the normal eviction process. They can sign and promise you anything. If they don't honor it, then you will need to evict. No way I would close with renters still there.

And yes, I am an attorney.

[bpu699]

It doesn't matter what the renters sign or don't sign... Its not unusual for a renter to "stay over" or move out after a deadline...

You need to make sure your contract explicitly states what happens "if" that occurs... Thats what lawyers are for.

"IF tenant is not move out prior to walk through THEN buyer has option to terminate contract, or, without terminating the contract be paid $500 per day by the seller and closing is postponed until tenants leave.

IF you buy the house with the tenants in it, then YOU have to evict them.

YOU do not deal with the tenats... the seller does... assuming part of the sale contingency was that they move out.

Bo

[look 171]

No need for a lawyer. If they don't leave, you don't close escrow. My advice is to not rent it back to them due to whatever reason they give you, if there are any, not even 1 or 2 days. some people get caught up in the extra few days of rent money and ended up screwing themselves.

[bpu699]

Originally Posted by look 171

No need for a lawyer. If they don't leave, you don't close escrow. My advice is to not rent it back to them due to whatever reason they give you, if there are any, not even 1 or 2 days. some people get caught up in the extra few days of rent money and ended up screwing themselves.

Depends on what the contract says...

[DonDavis]

Agreed. Don't close with renters still there. It's the current owners responsibility to get them out prior to close.

I like this...

Originally Posted by bpu699

You need to make sure your contract explicitly states what happens "if" that occurs... Thats what lawyers are for.

"IF tenant is not move out prior to walk through THEN buyer has option to terminate contract, or, without terminating the contract be paid $500 per day by the seller and closing is postponed until tenants leave."

[chocolatelab]

+1000

Don't close with renters in. No how no way

[TheMentat]

Originally Posted by bpu699

it doesn't matter what the renters sign or don't sign... Its not unusual for a renter to "stay over" or move out after a deadline...

You need to make sure your contract explicitly states what happens "if" that occurs... Thats what lawyers are for.

"if tenant is not move out prior to walk through then buyer has option to terminate contract, or, without terminating the contract be paid $500 per day by the seller and closing is postponed until tenants leave.

If you buy the house with the tenants in it, then you have to evict them.

You do not deal with the tenats... The seller does... Assuming part of the sale contingency was that they move out.

Bo

+1

[porsche4life]

Yup don't close until they are gone. You need to be leaning on the sellers to get them out if it doesn't look like they are leaving in time. You don't need the renters to sign anything as they are not a party to the purchase contract.


Buying houses with renters is a pain. I cringe when I'm showing houses that still have tenants in them.


*Im a licensed realtor in AZ.

[notfarnow]

Property to be vacant on closing, otherwise this offer shall be deemed null & void and any funds held in escrow will be returned to purchaser without interest or penalty

[Targa Me]

Thank you so much everyone.
I really appreciate your input.

[Eric Coffey]

Originally Posted by Targa Me

I'm looking to buy a house (primary residence).
Currently the property has renters living there. They are to be out by the close of escrow.

Do I need the renters to signs a document stating they will leave the property at the close of escrow or will the Clear Walk Through prior to the close of escrow be sufficient? In other words, after the walk through, if they're not gone, I'm not signing closing documents.

IF you are looking to buy, I am assuming there is no contract (yet)? If that's the case, you simply need to make sure the issue is addressed in your offer. If the tenants have a valid lease that extends past your proposed COE date, you will likely be required to honor it for the remainder of the term. As the new owner/landlord, you would be entitled to the pro-rated rent from COE onwards, but would also be the one to deal with eviction if necessary.

If you don't want to deal with any of that, you need to be absolutely certain of two things prior to taking possession: 1. Termination/expiration of all existing leases. 2. Tenant vacation/eviction (to include all of their personal belongings).

So, before even submitting an offer you might request a copy of the existing lease to confirm the dates, and better yet, a copy of a signed/dated notice of “non-renewal” or “intent to vacate” from the tenants to the current owner/landlord. Then, draft up the offer with a COE well past the lease expiration date. If you already have an executed contract in place, you can draft up an addendum addressing the issue. However, if you are not in a position of leverage (outside of your due-diligence period), it may be too late to slip an addendum in. That said, most decent RE contracts will include "occupancy" as one of the conditions of "possession" which occurs upon COE. If that is the case, you will have leverage even if you are past your due-diligence period. Still, it's best to avoid any potential issues from the start.

On an initial offer/contract where occupancy isn't already addressed in detail, you can include something like: "Purchase is contingent on the property being free and clear of any/all leases and sub-leases, with all tenants having vacated the premises, and any/all personal property removed, no later than 5 days prior to COE". You might throw in a cure-period and/or non-compliance remedy clause as well (to include daily monetary penalties), if not specified already.

As mentioned, I would (personally) never enter into a post-possession or lease-back agreement on a primary residence. It is just asking for trouble IMO. Be sure they are gone before it is yours, and change the locks the same day you get the keys.

Good luck!


Disclaimer:

I am in the RE industry, but not an attorney, and the above is not legal advice, just my opinion. Yadda, yadda, yadda. YMMV.

[URY914]

Ok I can understand if the renters are toothless crack heads but they could be two coeds that just want to lay around the pool all day. What is wrong with that? I'm sure something could be worked out.

[GH85Carrera]

Personally I would want a good inspection of the house after all renters are GONE and the locks changed.

[look 171]

One more thing, if the renters have been psychically moved out, and left behind personally belongings (up to a certain value, that amount escapes my mind), you are responsible to store them at YOUR EXPENSE for 30 days until they come to get their crap.

[look 171]

Originally Posted by GH85Carrera

Personally I would want a good inspection of the house after all renters are GONE and the locks changed.

Not all renters are bad people, we have all been there one time or another. I and many I know never destroy anything when moving out. Lock change for a piece of mind, sure but hiring an inspector is over doing it IMO. For the most part, I think you can see the damages that weren't there before. If you are concern about dumping concrete down the drain, then flush all toilets during walk through.

[GH85Carrera]

Not all renters are bad people and some renters you think are great seem to have a dark side. I was renting to a nice lady and she kept my rental house looking nice. When I had had enough of the landlord fun I gave her six months notice that I was planning to sell the house and offered to sell it to her. She could not afford the house and it took several months to find a buyer. When she moved out the house was infested with fleas. I had to pay an exterminator to nuke it and I showed the buyers a contract to have new carpet put down. Just go pick the color they wanted.

When we were selling a house we were living in we were waiting for the house we live in now to close the contract. The sellers were moving slow. A lady offered to buy our house for the full price but she wanted to close right away and them rent it back to us with a big damage deposit. We told her to take a flying leap off a bridge.

When it comes to real estate normal people often get weird.

[biosurfer1]

Originally Posted by look 171

Not all renters are bad people

True, but you don't plan for those, you plan for the lowest common denominator.

[t6dpilot]

Originally Posted by Eric Coffey

IF you are looking to buy, I am assuming there is no contract (yet)? If that's the case, you simply need to make sure the issue is addressed in your offer. If the tenants have a valid lease that extends past your proposed COE date, you will likely be required to honor it for the remainder of the term. As the new owner/landlord, you would be entitled to the pro-rated rent from COE onwards, but would also be the one to deal with eviction if necessary.

This. The Statute of Frauds requires that any lease for one year or more be in writing. I am sure that is what they have. That lease cannot be terminated unless agreed to by BOTH parties. The lease DOES NOT terminate if the property is sold (to you). Unless... The lease agreement contains a "sale clause" that will permit the new owner to cancel the lease after given the tenants a notice before termination. But that clause must be in the LEASE agreement.

There are a whole other set of rules that address termination of leases as a result of breach by either party, but I don't think you will deal with this. Under these breach circumstances, you must go to court to remedy the situation.

Good luck and thoroughly review the signed lease and purchase contract. I will second the Eric's last comments...

[greglepore]

And, the continuation provisions (month to month or year to year) and all notice provisions carry over. Notfarnow hit it on the head, from both a legal and r/e perspective. Make it not your problem.