I'm new to BP and REI. One of the reasons I joined is because I need some advice already. I just closed on my 1st investment property on 4/30. Everything seemed great at first, but I'm already having major issues with one of my tenants. The property is a duplex multi-family, so I have a tenant upstairs and another downstairs.
The upstairs tenants I've had no issues with at all, they've been great. The downstairs tenant is going to be a major problem I feel unfortunately.
I guess I'll start from the closing, there was some issues with the home, and I requested repairs be made prior to closing, which the sellers did as I requested, as well they repaired what the inspector requested.
I only pay the water and sewer bills, here lies the issue...The downstairs tenant called me the other day and said his electricity got shut off. So I called the utility company and things got even stranger. Turns out the previous owners were paying the downstairs tenant's utility bills during the inspection process since March and they just turned it off on the 13th. Prior to that either the power was turned off or the 1st floor tenant was paying, (which I doubt he was...) The utility co. wouldn't really give me a straight answer, and they said the account belongs to no one as of now.
So they lied to me at the closing, they also covered up a lot of other problems, and they basically voided their own lease if I'm correct. The lease, (I have to honor, as I understand it, says the tenant pays all utility bills except water/sewer.
Here's the good part...the 1st floor tenant is also on TRA, temporary assistance. Now I've mailed my information to his case worker to receive my portion of the social services rent.
I'm going down to the house tomorrow to have work done that was a credit at closing, and I'm not sure what to tell him. I told him yesterday to call the power co. and open an account because in the lease he is responsible for the gas/electric bill, but he hasn't done that yet. Today he told me he can't afford it, he can't afford the rent this month, and he got in an accident and he's waiting on a settlement...
The good news is I'm in contact with a great property management company and I've signed an initial agreement to have them take over on June 1st. The problem is the lady was out this week when all of this went down. But I hope to talk to her by Monday. And not to be a jerk, but the other good news is if anything comes of this like eviction, damages, etc. I can basically buy and sell everyone involved and afford any rehabbing, eviction/lawyer costs.
As I said the 2nd floor tenants have power, paid me the rent already, no issues at all...I've also put the water/sewer bill in my name already.
So finally my question is am I obligated to turn the utilities back on as he is on TRA even if the lease states he's responsible? I just don't want to be in the wrong here, I'm trying to do everything right unlike the sellers...And trust me I know I made mistakes here not researching more, but when sellers are covering up issues and not telling you they are footing the bill for a delinquent tenant it's hard...Also would I have a case against the sellers at all? Or should I just eat whatever comes?
BIG TIA! Sorry for the long post. I'm in NJ BTW if that helps. I have no clue why the sellers even rented to him in the first place.
Landlord tenant law is differant in every state. Your new property management company should be able to tell you what you can do here. Strategically, I would launch that tenant as soon as your local laws allow. Dont let that cancer infect the other tenant.
You might also want to talk to a local RE lawyer about taking action against the people who sold you this property. It sure sounds like they intended to screw you, and that is generally illegal.
It has to get better from here
To your success
Thanks so much Josh! The property management lady just emailed me so its getting better already! I'm going to send her all the information I have. I think the 2nd floor tenants will be alright, they've been very straight forward with me and very nice.
The TRA guy, eh...not so much, but hopefully the PMC will take care of that. I just want to get this work done tomorrow and not really have contact with him after that. Its just this work was a credit and needs to be done by a certain time frame.
So I'm guessing I can just leave the power off and not have any repercussions until the PMC takes over?
I'm really hoping he just moves out after I tell him the PMC is taking over because they aren't going to cover for him and pay his bills. And I hope it just scares him off sorry to say.
I wouldn't turn the power back on until I got a court order to do so.
And, I'd start eviction immediately. I'd file eviction with the court, and let the court figure it all out.
And if the social services told me I had to get the power turned back on, I'd tell them to get a court order and I'll do so.
I'm confused by your saying you can afford to buy things? If you're saying you can afford a lawyer, I think you should call one and let him/her figure this all out and deal with it for you. I'd rather have a lawyer dealing with this than a PM, personally. And the lawyer could help you regarding the deceptive seller, too.
Just a thought, if you haven't done so already, perhaps offer him cash for keys rather than go through the eviction process. Tends to be cheaper and can actually improve the chances that he won't trash the place on his way out.
Sorry Sue. Actually the PM I'm dealing with has their own lawyers/firm, they handle everything at a bit of a discount. So I think I'll be good soon.
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