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I have a contract to purchase a townhouse in Miami, Florida.
Simple deal, arms length transaction (not SS or REO), cash sale, AS-IS, 10 day inspection kick out, the only complication is there is an existing tenant. Not a big deal, I just added in a standard existing tenant addendum in the FAR/BAR contract.
Now that we have been offering and counter offering back and forth and got the price agreed upon.
But then I requested a copy of the lease and something isn't right.
The townhouse in that area should be renting at a $1100 to $1250 per month range. The lease says $400 a month and no security deposit.
I called and it was explained to me that the reason she is selling is because she is moving in with her boy friend, and then she leased the unit to her boy friend's brother. Thus the token rent and no security deposit.
I got the owner to agree to reduce the agreed upon purchase price by assuming a $1100 market rent value, and there is a gap of $700 between market rent and actual rent. Since there are eight more months until the lease expired, I wanted $5600 reduction of the price of the unit as compensation. She reluctantly agreed.
Now come the issue of the security deposit. I am not sure how to go about it. I don't want to unit to be returned in bad conditions, and taking possession in the middle of the lease makes it difficult for me to asses the present conditions except for a brief inspection period.
I am thinking to ask for two month security deposit at market rent value ($2200) to be held in escrow until the lease expired. I am not sure if this would fly, and whether it is between me and the owner, or me and the renter. Anyone with experience on how to rectify this issue?
If YOU are moving in then you have LOT's of latitude to force this tenant out.
If you are NOT moving in then this TENANT has LOT's of latitude to stay put...
and under the terms (rate, deposit, renewal, etc) of the lease they have.
If you don't already have a RE Attorney... NOW is the time to find one.
It would be between you and the owner. If the current tenant has a signed lease which expires in 8 months, you cannot ask for security deposit (or raise rent, etc) until that lease expires. They are locked in at that prior agreement.
Normal security deposit is usually not more than 1 month rent.
Sounds like the current owner was going to try to pull the wool over your eyes and give you a tenant that got very cheap rent and stick you with it for 8 months. Glad you caught it. I just wonder if the "tenant" is really the prior owner...since she says she rented the unit very cheaply to her boyfriend's brother and she is moving in with her boyfriend.
Depending on how the lease is worded, if you find the actual tenants are different than who is on the lease, you could possibly evict them. All depends on whether the lease specifies that no other tenants allowed and also says no guests longer than X days. also depends on Fl landlord tenant law.
A good lease lists the vehicle make/model and car tag of each tenant.
Something is very fishy. I think she is planning to stay 8 more months and did some funny lease thing with the help of her boyfriend and his brother in order to get herself 8 months of discounted rent.
We are in the process of purchasing a home that has renters. This is a million dollar home in a great neighborhood. When we saw the place, it had gorgeous furniture, very well decorated, etc. They seemed like a nice, young couple with a baby about 1 years old. He has a new BMW. We thought all was good.
They were supposed to leave April 30th, and we were supposed to close May 5th. They absolutely won't leave (they have been trying to buy the house but don't have the money). They haven't paid rent in months and owe over $30,000 in back rent/fees. Seller/landlord went to court a few weeks ago but the warrant of eviction still hasn't been served.
This is now causing us $$$$$ in terms of extending our mortgage rate lock and the lock of the buyers of our home. It is a huge mess, and I don't think that we would ever pursue a home with renters again. They have no motivation to leave. We think that they are hoping that we walk away, then they can pursue purchasing it. It has gotten borderline ridiculous.
From my experience, buying a home with a tenant is a HUGE mistake. DO NOT inherit the tenant. It is in our contract that we cannot close until the house is vacant, so we will never inherit these people. You will inherit those tenants and become a landlord. They could live there for months....
The Lease CONTRACT which this TENANT has with the current OWNER
and which attaches to the property upon transfer may indeed be ridiculous...
but even if it's beet soup it exists and is BINDING upon the BUYER.
Get your RE attorney in on this NOW.
Ideally you want to take over a place empty at closing...
or when the tenant is approved by you and under a lease you're comfortable with.
This deal is already sour on all of those points.
Don't write a check for anything more than a token deposit until it is empty.
Just because there isn't a deposit on hand that doesn't mean you can't go back and sue the tenant for any damage that wasn't there when you did your purchase inspection.
You really need to talk with a RE attorney about this.
Just because there isn't a deposit on hand that doesn't mean you can't go back and sue the tenant for any damage that wasn't there when you did your purchase inspection.
You really need to talk with a RE attorney about this.
And suing the tenant is no guarantee of actually collecting any money. First you have to win and then you have to collect. Neither is assured.
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