Hello, I am looking to purchase foreclose property with renter.
Here is the twist.
Renter has a long term lease that they payed for all upfront during signing.
Bank took them to court to move out but tenant has won the case and can stay in the house.
If I buy the house tenant can stay there rent free for several more years.
I do not want this tenant to stay since they could be trouble for me.
I could pay them off to leave, but I do not want to do this since, I feel that he as a fake lease(original house owner is dead) and they would be profiting from their scheme. Also event if I pay them off to leave they can still drag me through court it seems like that type of people.
Has anybody run to this type of situation and how did you handle it.
Typically when you buy a house that has an existing tenant the seller gives the buyer any prepaid rent. Since the seller is not there I would reduce the amount I pay for the house by the amount of rent that I am owed. The tenant can’t be expected to pay rent twice.
I decided to walk away. Great price on the house, but tenant will be there for 2 more years rent free and is not willing to move if payed off. Also from tenants history he seems that he likes to sue people, so even if he is payed off, he will drag me through courts, I am sure he will come up with something.
If they already won the case, then what made you “feel” that the contract is fake. Court cases are decided only based on the merit of evidences, not on subjective feelings.
But yes, you made the right move of staying away from that property and not getting yourself involved.
Or maybe you could wait until the lease expire and then buy it, but then someone else can beat you to it. Someone who is willing to pay the current tenant.
Prepaid rent should be credited to the buyer at the time of closing. If the lender wants to take it out of the closing proceeds, well so be it. But the buyer should receive the remaining amount of pre-paid rent. It doesn’t matter if it was “lost” at the foreclosure, the bank should be prepared to include it in the closing statement.
Or… as mentioned above, the value of the property should be discounted to account for the loss of the future income stream. A competent appraiser will be able to compute the discount rate and amount for you.
This could be a good deal if the price is right. Even if you have to “wait” to see income for 2 years. Since you will have a copy of the active lease agreement, in the event that the tenant breaks the lease, you would be able to evict. Just find out how the lease is set up to handle refunding the prepaid rent.
If I were you I would’t purchase this foreclose property that can cause you lots of problems. Why don’t you purchase some other property that won’t have a tenant that won’t pay you the rent. It’s not a deal for you. REO properties are an affordable housing option, but there are also more things to watch for with this type of home purchase. If you want to buy a foreclose property, look through online websites to find other variants that will be suitable for you. For example, at Localmartuk.com you may also have the opportunity to inspect the property and see the photos with printed descriptions. Only you can decide if buying a foreclosed home is a good match for your current situation. Weigh the pros and cons! Good luck!