Auction Purchase...Evil Tenants= HELP!!

https://grddlaw.com/purchasing...

Greg H.Pro Member

Moderator

Broker/Flipper · Austin, TX · Member since 2013 · 4k+ posts · 4k+ votes

3y

This article addresses the process for Virginia:

Have they provided evidence of paying March rent or did they pay you?

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

3y

Ask them for a copy of the lease since they told you there was no lease in place earlier when you spoke to them. If they have a real lease, then follow it and let them know now that you will honour it, but if they want it extended past Jan 2024, the rent will be $1500 (yes I know you said $1400, but that was when they said they had no lease-and it will be 9 months down the road, so rents go up). Let them know how to pay the rent and if they fail to pay the rent on time, start an eviction.

3 Reply

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

All that has already been accounted in my numbers. I’m just trying to resolve it easy way, but it doesn’t appear it will go that way.

Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

3y

The lease, if one truly exists, was not the result of an arms-length transaction. Likely executed within the past few days and backdated. The definition of bona fide tenant/lease also includes reference to market value. Is 60% fair market value? Hardly... the tenants and their lawyer are playing games.

Were I the auction purchaser in such a situation I would leave emotion out of it, give the appropriate notice to quit, and on the first possible day file to evict and obtain possession.

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5 Reply

Tim J.

Investor · Vermont and New York · Member since 2023 · 308 posts · 309 votes

3y

also offer the Cash for keys option.

4 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

3y

@Huso Akaratovic

Get an attorney to deal with it and start eviction and have them provide copy of lease. If lease is not arms length transaction and between family then it can be null and void if to prove its a below market and not arms length transaction

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Christian JonesPro Member

Investor · Fordland, MO · Member since 2022 · 18 posts · 5 votes

3y

Quote from @Chris Seveney:

@Huso Akaratovic

Get an attorney to deal with it and start eviction and have them provide copy of lease. If lease is not arms length transaction and between family then it can be null and void if to prove its a below market and not arms length transaction

What is an arms length transaction?

Tom GimerBusiness Member

DMV · Member since 2017 · 3k+ posts · 3k+ votes

3y

Quote from @Christian Jones:

Quote from @Chris Seveney:

@Huso Akaratovic

Get an attorney to deal with it and start eviction and have them provide copy of lease. If lease is not arms length transaction and between family then it can be null and void if to prove its a below market and not arms length transaction

What is an arms length transaction?

Fair and equitable transaction in which buyer and seller have no previous relationship and the terms of sale/rent reflect current market conditions.

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Scott Mac

Austin, TX · Member since 2019 · 5k+ posts · 5k+ votes

3y

You almost double their rent with no warning and you call them evil.

It's unlikely the working poor will have that kind of of extra money left over at the end of the month.

Most live paycheck to paycheck and some use free legal attorneys while you have to pay.

Good Luck!

4 Reply

Jill F.

Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes

3y

I'm wouldn't characterize the tenant actions as evil.

1) You should learn the laws in the areas where you own property (right now).

2) You should, in writing, demand a copy of the lease they claim to have and give the tenants a time limit to produce the document.

3) Send the tenants written notice of rent increase (and/or non-renewal) according to the laws in your state and city if the tenant fails to produce a written lease.

3 Reply

Arsen Atanasovski

Investor · Rochester, MI · Member since 2017 · 1k+ posts · 584 votes

3y

File 30 day, after that you will be a happy man!

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

3y

Evil? That's a little over the top. How did you expect someone to respond when you wanted to double their rent?

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https://grddlaw.com/purchasing...

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

Quote from @Greg H.:

This article addresses the process for Virginia:

Have they provided evidence of paying March rent or did they pay you?

@Greg H. They haven't paid me any money nor did the provide me any leases. And if they do eventually provide a lease, it will be made up BS. I'm just curious at this point what the lease is going to look like.

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

Quote from @Tom Gimer:

The lease, if one truly exists, was not the result of an arms-length transaction. Likely executed within the past few days and backdated. The definition of bona fide tenant/lease also includes reference to market value. Is 60% fair market value? Hardly... the tenants and their lawyer are playing games.

Were I the auction purchaser in such a situation I would leave emotion out of it, give the appropriate notice to quit, and on the first possible day file to evict and obtain possession.

@Tom Gimer I swear you just can't help people even when you really try to it from the bottom of your heart. They way I see it, I'm a winner in this situation no matter what. My lawyer is most likely going to be involved. I really don't have time to be dicked around by bunch of tenants that can't even get their own household in order.

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

Quote from @Tim J.:

also offer the Cash for keys option.

@Tim J. I don't think that is going to work. As they have stated they have nowhere to go. Plus, for years they have been paying cheap rent and we know anywhere they go now that will be nearly doubled.

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

@Russell Brazil I know they were caught off guard, and I do feel it for them. It is not my fault that their family member screwed them over. I tried to be proactive, I went to knock on the door the first day I won the bid. That gives them 14 days to make a decision if they want to stay there or move out. I did not have to do that because eviction is nothing new for me, and I buy at auctions all the time and this is already accounted as expense where i might have to evict folks out, and i have done it in the past, but of course i always try the easy route first. I also was going to let them break the lease whenever, so the $1400 could've been temporary. Plus, he told me wife and him have both good jobs that they have been holding on for 10-15 years and they both work for 2 local reputable employers that pay well. I put in the title evil, because when we touched basis few days later he went off on me and called me bunch of names and started treating me. I guess google research has empowered him to be brave all of sudden and enabled him to treat me like ****. I just didn't disclose that in my initial post, bc i thought it was not relevant. As far as the doubling the rent part goes, they were leaching off for 8 years at the super low rate, and who knows maybe they didn't pay at all. Perhaps, they are the reason the property foreclosed? we don't know who is right, the tenants or their relative. These days, i could rent me dogs outside house for $850, not to mention a 2br 2 full baths beautiful condo with 1000 sq ft, i could probably get section 8 for 1500-1600. So. yeah screw him. Im not even trying to help anymore. I am good either way, the unit is already paid off.

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

Quote from @Arsen Atanasovski:

File 30 day, after that you will be a happy man!

@Arsen Atanasovski you are absolutely right my man!

OP

Flipper/Rehabber · Newport News, VA · Member since 2016 · 128 posts · 54 votes

3y

Quote from @Scott Mac:

You almost double their rent with no warning and you call them evil.

It's unlikely the working poor will have that kind of of extra money left over at the end of the month.

Most live paycheck to paycheck and some use free legal attorneys while you have to pay.

Good Luck!

@Scott Mac they got plenty of money. It is much easier to be a victim vs paying up. Its tax season, everyone is rich!

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

3y

I doubt a legal lease exists, but I also think this will be a bit more effort than you expect.

First if they produce a lease, you will have the burden of prooving that is is not a legit lease. This can be difficult if it is backdated and has the appearance of a legal lease. The arms length item also is not as easy as proving that the lease is below fair market value. A LL can provide a lease that is below market value. It is commonly done for various reasons including that the tenant is outstanding or the LL is too lazy to determine fair market value or risk a tenant turn over. None of these items are the tenant's responsibility and a judge will likely find the lease valid.

Second there is no cause at this time for eviction. In Virginia you must provide 30 day notice of rent increase or lease termination if the lease is month to month or in the absence of a lease. This implies you are probably at least 30 days from being able to start the eviction process.

Next is how long are evictions taking in your jurisdiction. My jurisdiction have historically been very slow, but post covid is even slower. I would consider myself lucky if I could get an eviction in 6 months. I doubt your area is as slow on evictions as my jurisdiction, but I would be surprised if you could get them out in a single month after being able to start the eviction process.

Then you risk the tenants damaging the property. Seeing you have no move-in condition check list, you likely will not be able to collect on any damage that is not obviously new. For example,if they put cement down the sewer they could claim the sewer always had problems but because they were paying such low rent that they lived with having to constantly plunger. You get the jest of what I am implying.

It behooves you to try to work out a mutually agreeable compromise. This is the safe and prudent option. If you stay confrontational, the odds you have heavy damage when your tenants vacate the property increases.

good luck

Brandon Leffler

Rental Property Investor · Stockton, CA · Member since 2020 · 35 posts · 22 votes

3y

@Huso Akaratovic I would speak to the local sheriff

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Russell BrazilBusiness Member

Moderator

Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes

3y

Quote from @Huso Akaratovic:

@Russell Brazil I know they were caught off guard, and I do feel it for them. It is not my fault that their family member screwed them over. I tried to be proactive, I went to knock on the door the first day I won the bid. That gives them 14 days to make a decision if they want to stay there or move out. I did not have to do that because eviction is nothing new for me, and I buy at auctions all the time and this is already accounted as expense where i might have to evict folks out, and i have done it in the past, but of course i always try the easy route first. I also was going to let them break the lease whenever, so the $1400 could've been temporary. Plus, he told me wife and him have both good jobs that they have been holding on for 10-15 years and they both work for 2 local reputable employers that pay well. I put in the title evil, because when we touched basis few days later he went off on me and called me bunch of names and started treating me. I guess google research has empowered him to be brave all of sudden and enabled him to treat me like ****. I just didn't disclose that in my initial post, bc i thought it was not relevant. As far as the doubling the rent part goes, they were leaching off for 8 years at the super low rate, and who knows maybe they didn't pay at all. Perhaps, they are the reason the property foreclosed? we don't know who is right, the tenants or their relative. These days, i could rent me dogs outside house for $850, not to mention a 2br 2 full baths beautiful condo with 1000 sq ft, i could probably get section 8 for 1500-1600. So. yeah screw him. Im not even trying to help anymore. I am good either way, the unit is already paid off.

2 weeks notice?

Im not sure if you're asking legitimate questions or if you're trying to sound as much like an ******* as possible to be funny.

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Bruce WoodruffPro Member

Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes

3y

Quote from @Huso Akaratovic:

@Scott Mac they got plenty of money. It is much easier to be a victim vs paying up. Its tax season, everyone is rich!

Lol. you must be new to the self-employed thing. Tax season, everyone is poor....

Justin Summers

Baltimore, MD · Member since 2015 · 7 posts · 7 votes

3y

I deal with this on a regular basis on my foreclosure purchases. They had to know the house was going to foreclosure.. Check the courthouse file and see if they were served by the sheriff, usually a mortgage foreclosure is required to serve the tenant. They all try to "game" the system .. They will say they have a lease when they are squatters. They will forge a lease,. They will say they have a place to move but just need 60 days until it's available, ect.

This is my suggestion.

Do NOT sign a new lease with them or tell them in writing or in person they can stay in the house. for ANY amount of rent. This will end badly .

Hire an attorney and start the process of notification and eviction immediately. An eviction "mill" law office is fine- Should only cost $400-$800. Make sure you try and find out all the names of the people in the house for the eviction if you can't the attorney will list all occupants but it's MUCH better to have their real names. That way if they Stay in the property all the way up through the actual eviction date there will be a recorded judgement with their names on record and future landlords will be able to take this into consideration when they try to rent again.

Send the a certified letter and request a copy of their current lease along with copies of their cancelled checks for their last 6 months of rent payments.

Meet with them in person if possible. Tell them you will be challenging their lease in court and you will both have to hire attorneys which will cost both of your money. As an alternative to paying your attorney you will offer then $1000 if they can be out of the house within 30 days.. $1,500 if they can be out within 2 weeks. This usually works. Make sure and DON"T pay them anything until they are fully out of the house.. Also, do a walk through before agreeing to the cash for keys and make sure and list all appliances and items that must stay and be undamaged for them to get paid upon leaving. Also state in the agreement that there will be no trash left in the house / yard / or at the curb and the house will be broom clean.

Even if they sign this agreement still proceed with the eviction process after your proper notification for a hold over tenant is given.

in closing DON'T BELIEVE ANYTHING THEY SAY - Having a heart in these situations will cost to huge $$ loses.

5 Reply

Ben Zimmerman

Rental Property Investor · Raleigh, NC · Member since 2016 · 393 posts · 995 votes

3y

*insert_generic_Im_no_lawyer_comments_here*

If the original owner was family, and was giving a substantial discount to the fair market rent, then the transaction was not at arms length and the lease (in the unlikely event that there ever was one) is automatically terminated at the time of foreclosure.

I would imagine this is how the law works for pretty much every state. Imagine a father buying a house, renting it to his son for $1/mo with a 99 year lease agreement and then never makes a single mortgage payment on the home and allows the home to be foreclosed. That doesn't mean that there is some kind of magic loophole and that the child will suddenly never have to effectively pay rent again simply because "he has a lease".

Obviously consult your own professionals, but if the "lease" is broken at the time of foreclosure, then these people have periodic tenancy and a simple 30 day notice to vacate would suffice. I would issue a notice of non-renewal and if they ask for their rental "deposit" back I would once again tell them that the lease ended at foreclosure, and the owner of record when the lease ended was the son in law, so if they want their "deposit" back they need to talk to him.

If they continue to press you for the deposit, or give you a hard time about anything else, I would remind them once again that you are not bound by anything in their 'lease', and then I would take it a step further and let them know that there are tax consequences for renting a home at below market value to family members and that the IRS offers a financial incentive to whistleblowers that report suspected tax fraud. Let them know that if they want to be petty, that you can be just as petty. They might be highly upset at what the son in law did to them, but they aren't going to want to open that can of worms on him. (even if it's likely the IRS wouldn't investigate, the family still won't want to take that risk)