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I know I have posted several questions lately, sorry for that.
Basically, our situation is this: we put an offer in on a short sale, the seller accepted the offer and it has been sent to the bank(s). There are two banks involved - Citi is the 1st and National City is the 2nd. Both have already completed their BPO. Citi enformed the listing agent that they will get back to us after a 14 day review period, which is pretty quick.
I had forgotten about the fact that there is a tenant in the property right now (seller is in the military and has been stationed elsewhere). I had asked beforehand and the listing agent said that the tenant would be given 30 days notice when escrow is opened and that the tenant would be out long before the close of escrow.
However, with the banks wanting such short escrows on short sales, what if the tenant is not out in time? We can't pay rent on a home and a house payment on the new home for any extended period of time. How does this work? Is there anything we can do to protect ourselves? We are in California.
I know I have posted several questions lately, sorry for that.
Basically, our situation is this: we put an offer in on a short sale, the seller accepted the offer and it has been sent to the bank(s). There are two banks involved - Citi is the 1st and National City is the 2nd. Both have already completed their BPO. Citi enformed the listing agent that they will get back to us after a 14 day review period, which is pretty quick.
I had forgotten about the fact that there is a tenant in the property right now (seller is in the military and has been stationed elsewhere). I had asked beforehand and the listing agent said that the tenant would be given 30 days notice when escrow is opened and that the tenant would be out long before the close of escrow.
However, with the banks wanting such short escrows on short sales, what if the tenant is not out in time? We can't pay rent on a home and a house payment on the new home for any extended period of time. How does this work? Is there anything we can do to protect ourselves? We are in California.
Thanks.
You have to find a local expert for this question. It's different in every state. I know that in NJ the tenant must be allowed to stay the full term of the lease, and even if there is no lease, no one but the new owner will do anything about getting them out. If someone warranted to you that the tenant would be out before closing, do yourself a HUGE favor and have them put that in writing, with an agreememtn that the seller, or whomever is making the gurarantee, is on the hook for all costs in case the tenant is not out.
Since we already submitted the offer, is there any way to add a contingency that the tenant has to be out at closing? The problem here is that this is a short sale, so the bank is the one we are dealing with, and I'm guessing the seller doesn't have any money for us to come after him for costs if the tenant is not out.
I'm waiting to hear back for sure whether this person has a lease (and if so, when it expires) or if it is a month-to-month agreement.
Since we already submitted the offer, is there any way to add a contingency that the tenant has to be out at closing? The problem here is that this is a short sale, so the bank is the one we are dealing with, and I'm guessing the seller doesn't have any money for us to come after him for costs if the tenant is not out.
I'm waiting to hear back for sure whether this person has a lease (and if so, when it expires) or if it is a month-to-month agreement.
Seriously, the first thing you need to do is put this question to your real estate agent and attorney. If they don't know the answer immediately, they should know where to find it pretty quickly.
***Some quick & dirty internet research leads me to believe that getting the tenant out should be relatively easy (especially compared with NJ). Be careful about your obligation to return his security deposit. I think that, if the tenant is still there when you become the owner, you will be responsible to refund his security, whether you collected if from the previous landlord or not. Again, confirm these thoughts with a local expert.
Last edited by Bill Keegan; 11-13-2009 at 03:21 PM..
Reason: Added the last paragraph
Yes you can add into the contract that the tenant will be out at closing assuming that there isn't a long term lease and it may already be in your contract. Have you read the contract?
Thanks. I am currently waiting to hear back from my agent - he has been great so far. I'm hoping it's a month to month tenancy so that this won't be a problem.
Yes you can add into the contract that the tenant will be out at closing assuming that there isn't a long term lease and it may already be in your contract. Have you read the contract?
I did not see anything addressing this issue in the contract (I have a copy on hand). I really probably should have asked to have that in the original contract, but I didn't because the listing agent said the person would be out in time.
I did not see anything addressing this issue in the contract (I have a copy on hand). I really probably should have asked to have that in the original contract, but I didn't because the listing agent said the person would be out in time.
Well even if it was in the contract there aren't any guarantees. Tenants can holdover and then the seller would have to go through the eviction process.
If there is a good relationship with the tenant and they know what is going on then that is the best. Your contract can't force the tenant to get out in time. Only the tenants sense of common decency can do that.
As the new owner and if there is a lease, you have to honor it. If not, you can give notice in accordance with your state regulations. Regardless if there is a lease or not - you are at the tenant's mercy.
However, the good news is that he will have to pay you whatever his rental agreement stipulated. That should help you financially in the event you need to keep paying rent at your current location.
I just heard back from my agent, and he said that he confirmed with the listing agent and the property management company that the tenant is on a month-to-month basis and we need only to give 30 days notice. It sounds like the tenant has been good and has a good rapport with the seller/property manager.
If we have to do an escrow period of less than 30 days, does that mean that we would get the rent money for however many days difference from when we close escrow and the tenant vacates?
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