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Run away. Too many potential problems. What if they don't leave ? What if they destroy the place ?
What if you find some condition during the home inspection that needs repair prior to closing. What if the tenants make it impossible to get that done.
Tell the sellers to keep the place vacant or you'll walk. Look out for own best interests. Your best interest is for the place to be vacant.
And if they agree to keep it vacant, put it in writing that if you find somebody living there, the offer is rescinded. I'd be riding by the house every day to make sure nobody is living there.
Does the tenant have a short-term lease specifying limitations and responsibilities? Even so, this is a really strange and risky thing for the sellers to do for what one would assume is one month's rent(?) In essence, they are jeopardizing both their sale and your investment for a short-term gain ... while you assume all the risk! - The tenants may be perfectly nice people and nothing may happen, but, they may not ... and what if they are not ready to leave at the 'agreed time?' What in the world are the sellers thinking about?
Given the circumstances, even a last minute walk-through inspection may not tell you if sewer or water lines have been clogged with diapers or some foreign substance; whether animals have been allowed to urinate on the carpets; or if any of the appliances or A/C have been operationally damaged; if water overflowed and seeped into carpets/walls, etc. In essence, you are almost forced to have a complete re-inspection done after the property is vacated, not just a final walk-through.
If the sellers persist in this post-sales-agreement course of action, I would add a post-sales-agreement provision that the sellers will arrange and pay for: a new, post-vacancy inspection by an inspector of your choice ($350+) a warranty on all appliances and A/C ($300+); plus have the carpets and house professionally cleaned ($400+)... AND that you will still do a pre-closing walk-through to ensure that all items have been completed to your satisfaction.
It may still be their house, but, think of it this way. What if you bought a new car scheduled for delivery in three weeks. But, the car came-in early, so the dealer decided to rent it out, until your scheduled delivery date.
People are advising adding various things to the contract. This can't be done unilaterally- the contract has been signed by both parties and can only be changed with the approval of both parties. OP needs to know how to protect his interests- and the only way to do that is careful inspections.
When the owners see that OP is serious about the condition at sale- they may reconsider.
As far as tenants not moving out- this is simple. Tenants present at walkthrough = no closing. Because the house is not delivered as contracted.
Your contract probably addresses something about receiving the house free and clear of any encumbrances, including tenants. You don't want tenants, even if their deposit is handed over to you. (Which it should be if you wanted tenants but I wouldn't fool with t his.)
Hopefully the seller already signed the contract that the house would be provided to you outright, which is standard in contracts and they may have overlooked it. And it usually says something about being cleaned in some respect. That can cover you.
Yes, definitely a problem inheriting someone's tenants. Big problem getting out people who don't want to leave. Especially when you don't hold the lease and deposit.
Big problem buying a house you did not purchase as a rental, however short a period. You did not get a chance to review the lease that would transfer to you. You did not approve the terms of the lease, the amount of the deposit (probably nothing with this group) and you had no desire to be a landlord.
If you already have a loan commitment with an expiration date on the commitment, whether the rental comes off or not you know what your dealing with so you need to write in the contract that if the commitment expires due to waiting for the tenants to move out and the house to be swept clean per the contract then the sellers will pay for the commitment extention.
You will have a walk thru before closing...vacation or temporarily homeless tenants, whoever they are, can be notoriously hard on a house that is not theres....so you might bring some level of inspector to check on some things before settlement. Run the washing machine (is their sand or lake soil involved in the area), etc.
And check very carefully for vandalism and just children gone wild stuff. Water/food/soda on wood floors. Shelves pulled down. Some appliances and lighting missing.
Thank you for all the great advice. We have not signed the actual contract yet- offer/acceptance was done verbally. We went to sign the contract yesterday and that's when realtor told us about tenants. She said it was no "big deal". I am awaiting more information regarding tenant- all I know is they are a family waiting to close on a house and needed a place to stay in the interim. We will be in the same situation if we go forward and would stay with family for a couple of weeks. The last thing we need is our move in date to be delayed waiting for these people to leave. Not sure there is a lease in place, have no idea. This issue was completely glazed over and I felt like realtors were almost not going to mention it at all. This should have been on listing paper. Most likely- everything would be ok, tenants would leave in a month, place would be in okay condition- BUT- like you all said- what if it's not. They could stay for months if they wanted. We could write stipulations about canceling contract if tenants are not gone by closing- but we are in a serious time crunch. That would be 2 months of time lost- hoping everything goes smoothly with these tenants. Just an added stress with an already stressful situation. We could just renew our current lease and keep looking and forget about this house. I cannot imagine why sellers would allow this- especially during the summer months, the height of real estate season in CT- and house was only listed 6 weeks ago- has not been sitting long. We would be scheduling inspection for the week the tenants move in. Will see what happens- going to find out a bit more and see what happens. thanks again!
Thank you for all the great advice. We have not signed the actual contract yet- offer/acceptance was done verbally. We went to sign the contract yesterday and that's when realtor told us about tenants. She said it was no "big deal". I am awaiting more information regarding tenant- all I know is they are a family waiting to close on a house and needed a place to stay in the interim. We will be in the same situation if we go forward and would stay with family for a couple of weeks. The last thing we need is our move in date to be delayed waiting for these people to leave. Not sure there is a lease in place, have no idea. This issue was completely glazed over and I felt like realtors were almost not going to mention it at all. This should have been on listing paper. Most likely- everything would be ok, tenants would leave in a month, place would be in okay condition- BUT- like you all said- what if it's not. They could stay for months if they wanted. We could write stipulations about canceling contract if tenants are not gone by closing- but we are in a serious time crunch. That would be 2 months of time lost- hoping everything goes smoothly with these tenants. Just an added stress with an already stressful situation. We could just renew our current lease and keep looking and forget about this house. I cannot imagine why sellers would allow this- especially during the summer months, the height of real estate season in CT- and house was only listed 6 weeks ago- has not been sitting long. We would be scheduling inspection for the week the tenants move in. Will see what happens- going to find out a bit more and see what happens. thanks again!
If the tenants' closing is delayed, then what?
These circumstances are VERY unusual. I would say no, cross out any reference to renting and see what the sellers say.
We have not signed the actual contract yet- offer/acceptance was done verbally. We went to sign the contract yesterday and that's when realtor told us about tenants.
So you did not sign, correct?
I agree that you should specify in the contract "no tenants" and say no to this now, or if they refuse just walk away.
You could add in all the extra provisions mentioned here (second inspection paid for by sellers, walkthrough with right to walk away, etc.) but as you alluded to, you don't want to be in the situation of having to walk away right before closing. In that scenario you'll have lost $ paying for the initial inspection, 2 months of time, etc.
Not surprising the realtor is minimizing this, as it may jeopardize the deal.
I did not sign yet. Holding off, but getting pressure from realtor to do asap. Just spoke with my realtor and she said the tenants are moving in tomorrow. So- too late to request "no tenants". My realtor states they are friends of the family and she doesn't believe there is a lease ( just a verbal agreement). She says they are closing on their home and will be leaving once they close, aroung Aug.1 Realtor laughed when I asked "what if they damage the home" and responded "oh- don't be silly- they are a family waiting for a closing"OKAY....as if I know the sellers or this family. There are lots of families who damage rental homes. She said I am making a big deal out of a very simple situation. So- I asked- what happens if their closing date is delayed or what if their mortgage doesn't come through. She said she would have to find out. This could be a very simple situation, but there is a slim chance it's disastrous. What happens if there is no lease- could they still stay after we close? Does it benefit us that there is no paper lease? What happens if during the final walk thru- we see damage. How would we be credited at closing for that? They may not even sign off on added contigencies re: tenants. This would have been so nice and easy (I think) without this whole tenant issue! Thanks again everyone.
Your not being silly and your agent doesn't seem to be looking out for your best interest... Be firm and don't let anyone push you to do something that doesn't have you covered for all possibilities. Don't be silly, it's family?
One more thing, it's not too late, they have not moved in yet - I'm sure other arrangements could be made if the sellers want to sell this house bad enough.
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