Fixing the house enough to make it safe and habitable is what needs to be done.
I would take that contract to a real estate attorney and get an opinion on it. If the tenants take this further (building inspector, lawyer) it will cost you much more than the attorney’s fee.
You are not in a position financially to carry on a big fight with a tenant or buyer. You need that rent coming in. See that attorney and get out of the mess as quickly as possible, even if it means giving them their option money back. You would need to keep the security deposit (don’t spend it!) and yes, maybe you have to reduce their rent in order to keep them.
I think a couple of you missed the fact that he did not take a seperate security deposit from these people. He has the option fee of $5K and that’s it. If he gives that back, he has nothing. Yes he may “appease” the tenants by giving them their money back because they whined and changed their minds, but who should be controlling the situation here? These people are just needling him to see how far they can get. It started with one complaint and spread like cancer. If these people entered the lease option with the house in the condition it’s in, they should’ve checked it out better since they’re unhappy now.
Okay, so I met out there with a contactor today. The tenant comes out and tells me that the trusses are now separating from the hip beam and one of the trusses has a crack in it. None of this was like this a week and a half ago when I was out there. Regardless, my contractor told me I need to get a structural engineer out there in order to tell me if by cintering in braces to the trusses and hip beams, it will make it structurally sound; or if I have to rip everything out and get a costly roof job.
What do you think? Is that the right move? The logic there is to have a certified engineer say what is safe and what is not; so he can’t argue with a contractor’s opinion.
I also went and measured up the bath, in order to do a quick rehab on the shower and floor. Also took the tenant in the crawl space to show him with a level that the house was not sinking and the floors were still level. I will begin rehabbing the shower and floor in the bathroom asap.
As far as the tenant, after I told him I was going to remedy the problems and fix them, he said that the main reason they don’t want to take their option is because they don’t like the school district it’s in - basically they signed and then found out afterwards that it was in a different district than they thought and now they are picking at things and hoping they can find a way to get their 5K deposit by coming up with problems so they can claim that’s why they can’t buy the house.
If they were that concerned about the school district, they could’ve made a couple phone calls to area schools with the address and figured out what district it fell into. So not only did they not do their due diligence on the house, but they didn’t do it on the school district either. This is another example of people not wanting to take responbility for their mistakes. They knew their option fee wasn’t refundable if they didn’t decide to buy.
Do you have pictures of the property from before they moved in?
Now you know the truth. These losers were lying all the time, just like tenants do 90% of the time. The problem was not the house, the problem is that they simply changed their mind, again as tenants often do (which is why they are tenants).
I would be probably try to find a couple more very competent contractors and have them go look at the roof truss issue. Hiring a structural engineer may be expensive and they may take the easy way out and tell you to rip the entire roof off and replace all the trusses or something equally ridiculous. You need a contractor who is very experienced and that has exprience with this type of repair.
I’d love to not pay for a structural engineer, but my concern is that this tenant will want to argue and/or bring “his guy” out there, or worse yet, call the building inspector to look at it. These guys are seriously looking for ways to cause problems and get out, and I’m not sure how far they would go.
Tell them they’re free to move. Just keep the option money. That was for the option to buy & they’re not buying. If they want to fight for that money, they’re going to have to pay to fight you. It’s going to be your word vs. theirs about their admission of what the real “issue” is, but they’re the ones who signed the lease option. If the house was that bad, they wouldn’t have entered into an option for it.
You definitely need to be getting attorney’s advice at this point it sounds like.
That said, as above, I’d say that they are free to move as long as the property is left in the same or better shape than it was at their move-in. In other words, you will not sue them for breach of contract if they do move. If they agree, simply confirm that the property is in the shape you want it (visual inspection), take the keys, then hand them a moving slip (release from lease agreement). The option can be voided but the option fee was and still is nonrefundable.
We’ve only heard one side of the story, but it sounds like they have a losing case which means that they would have to pay an attorney to take it. That’s not gonna happen. And if all your paperwork is in order, if they decide to “go it alone” it should also be an open/shut case, as you’ve handled everything correctly.
When I say they want to get out, I mean that they want a way out of their contract in which they get their option fee back. They have told me they don’t mind staying for a year as the original lease states. They just don’t want to buy the place, and are trying to find reasons why they should get their 5k back. They have basically stated that they don’t want to buy a house which needs so many repairs, and also said about the school district.
This once again goes back to personal accountability. They signed your paperwork for the “option” to buy your house. No one was going to hold a gun to their head and make them buy. No one made them sign your lease option agreement. They SURRENDERED their $5k as a fee to keep you from selling the house to someone else in the mean time. Maybe their credit was bad. Maybe they needed another year to save up some more money for a mortgage. We don’t know and you shouldn’t care. Their $5k is NOT a damage or security deposit. If that’s what they wanted, they should have rented a house or apt on a standard lease. They didn’t. You did not provide them with a home inspection; nor should you have. The OPTED not to get one. If the house truly had all the problems before they moved in they’re claiming it has now, they either didn’t care about it or they’re blind. They had the option to get the inspection. They probably wanted to save a few hundred bucks. They would have a hard time explaining their case and having a judge rule in their favor. And the thing about the school district is stupid… Guess they’re next complaint will be you didn’t tell them the house was too far away from the nearest McDonald’s.
I would not give them the option fee back, but I would keep a close eye on the property after you tell them that. Like I said, I hope you have pictures from before they moved in.
I would offer to convert this tennant from the lease option contract to a rental agreement, keeping the rent at $1400, and keeping 1 or 2 months rent as a security deposit. Have the rental agreement end when the original lease contract was to expire. Offer that and if they don’t want that, let them know that the $5000 option is legally yours to keep. My 2 cents. Pistol
Why, Pistol? Why would you just give away your (as the landlord) money like that? Giving back half the option fee and making the other have a deposit, which you will probably have to get back, too? Wouldn’t happen on my watch.
Justin really said it all so I’ll just say ditto to that!!
I have brought a few contractors out, and in their opinion the roof/trusses are safe and not in danger of caving in, due to some supports that were put in a few years ago. But they said in order to fix the problem eventually I should have that whole side torn out and re-done, rafters and all. So what I’m going to do is sister in a few new boards to bolster the rafters that have some cracks, and also put in a few collar ties while I’m up there.
The bathroom will be fixed soon too.
As far as the tenants go, I had a conversation today with them and they asked me if I was going to refund them the money for the deposit (5k). I told them bottom line is NO REFUND. It was explicitly laid out that it is non-refundable and if they were concerned about things, they should’ve had a home inspection done, or at least looked it over for more than 10 minutes. She’s not happy, but I think as much as she doesn’t want to, she knows that they blew it.
She told me that they are going to get a home inspector to check things out and make sure they are safe. I think they want someone to say it is unsafe, so they have just cause to move and get a refund because they had no chance to excersize their option. How should I handle them wanting an inspection, and what do I do when the home inspector comes up with all kinds of trivial problems?
A home inspection is going to point out trivial problems. That is really of no concern, IMO. The big problems are more the point. If you have written estimates/opinions of the contractors, I don’t think you’ll have an issue. Also, a home inspection after the fact doesn’t hold as much weight, either.
I figured that it won’t hold much weight now; I am just becoming increasingly concerned about things these tenants are going to attempt in order to get their money back. I really wouldn’t put anything past them.
I got up in the attic this week and braced up 4 rafters that were sagging, or cracked. Also got on the roof and replaced the two shingles that had blown off and used a tube of roof patch as well. So far so good up there.