What about when a contract is broken?

My husband I recently closed on our 2nd rental property. This property was part of a package deal we had with the seller and this property was to have a tenant in place (the tenant already had a lease with the seller and part of the contract was that we would take over that lease). When we went to check on the property and the one that was next door (that is the first property we purchased) we learned that the tenant has moved out. The seller said he has a lady lined up to move in, but she is on Section 8. I have signed up the neighboring house for Section 8 and I have no problem with Section 8 rentals, but I am concerned that our “guaranteed” tenant is no longer in place and now we are faced with finding another tenant a.s.a.p. What suggestions (if any) do you guys have???

From what I can understand, you didn’t have a contract with the tenant. The tenant had a contract with the previous owner of the property. So, you can’t go after the tenant for breach of contract, since you never had a contract with him.

However, if it was part of the deal for buying the property, you can go after the person you bought the property from. Did you try calling the previous owner of the property and find out if they knew anything about the tenant moving out?

I contacted the previous owner right then and there! He said that they (his company) also has a boarding house and has a tenant in the boarding house who will occupy the property once she has signed up for Section 8. My problem/concern is that is not what we agreed to. Our agreement was that I would take over the lease of the “current” tenant. We closed on Friday with the understanding that the tenant was still occupying the property. We visit the property on Saturday and learn that the tenant has vacated the property. The seller had a crew cleaning the house when we got there!!!

What I don’t yet understand: was this a written agreement between you and the seller, or just “your understanding” of what was going to happen?

One is legally binding, one is not.

This was a written part of the contract. What is ambiguous to me (at least now it is) is if they have the right to place another tenant in the property after we have closed. Since the agreement was for the property to already have a tenant in place, are they doing the right thing in getting this Section 8 recipient moved into the house? Although I have never met this woman before, I am willing to let her move in because I need to have this mortgage covered. The seller has promised me he wouldn’t “leave us hanging” and that he has a tenant for us. I feel as if I have been somehow wronged.

What is ambiguous to me (at least now it is) is if they have the right to place another tenant in the property after we have closed.
In this case you are stuck. Since you didn't clearly define the terms for the seller, he did what he wanted to do within the guidelines you gave.

Yes, it sounds to me like you were wronged. But there is no legal recourse, since you didn’t say “No section 8 tenants” in the contract with the seller. So, you can only call the seller and tell him that you feel that he intentionally switched out the tenant.

You could go to court, but he has a better defense than your case IMO. It would really depend on the judge’s opinion and mood, since there really is only vague evidence and assumptions.

I believe going to court would prove to be more costly and time consuming that it’s worth. I will accept the Section 8 tenant because I need someone in this house. I have decided to back out of the deal I had with the seller to purchase a 3rd rental from him. At this point, I don’t trust the guy anymore. I didn’t even tell you about the condition of the first house we purchased. It is in the contract that the seller is to make all repairs, but there are still a few more repairs that need to be made. The seller is taking care of it, but I was expecting those repairs to be complete by the time of closing. It’s hard to get someone in a house that still has repairs pending. These were my first two deals and I’ve already learned a lot about what not to do.

Court is usually more costly and there is no guarantee.

But, I have never had a good experience with section 8. The people are, many times, in a different mindset than someone who is paying you cold hard cash.

Don’t be surprised when they pee on your carpets, knock holes in the walls (and cover them with a poster), break windows and cover them with saran wrap…

I’ve seen it all.

Sometimes they care, because otherwise they will be kicked out of section 8. Sometimes they don’t care, because they have nothing to lose…

PS> Your mistake was closing a second deal when he has not honored the first. :wink: Also, it sounds as if you are not being specific enough in your contracts. You keep talking about things you were “expecting”. You need to have it in writing.

It could be as simple as: “Repairs will be complete within thirty days after closing. Repairs remaining after 30 days will be completed by an independant contractor of the buyers’ choosing, with the contractor’s bill to be paid by the seller.”

You are so correct!!! I have learned a valuable lesson. I closed on the 2nd house because it was part of the package deal. I wanted to honor what we had agreed to, but as you can see from my previous posts, that has gone out the window!

Well, I like to always say, there is very little to learn from books and courses, and much more to learn from the people you meet.

I congratulate you, because many people reading this forum are still “trying to learn” and not making any forward movement. You on the other hand, have learned a whole lot and will actually still come out pretty well on the deal.

Thanks for the vote of confidence!!! Most people (especially family) won’t cast their vote in your favor when it comes to rei. I really have learned a lot. Experience is the best teacher.

Most people are trained that an education and a well paying job is the only way to success.

And when they see you doing something differently, they have to justify why they are still stuck in their job and not trying anything different.

:wink:

Good luck! I envy you, you’re at the beginning of a huge “high”, the first year of Real Estate is the best while you realize that you are making huge sums while sipping Mai Tais by the pool.