Closing Approaching, Bad Tenant hasn't Vacated

11 Replies

March 10 is our closing date of a 4-family in St. Louis.  One tenant was/is a trouble maker, violating his lease and late on his rent.  Therefore, we bought on contingency that he vacate by closing.  Seller agreed. That date is Monday and he is still IN.  Says he needs another month.  We are certain that we don't want to take possession until he is gone.  What will the lenders do?  Is there anything I should do besides  wait?

Did you put language in the contract making it a requirement?  If so, you can walk if the seller did not make it happen.

You should not close until the seller moves them out.  The seller has no reason to do anything after closing.

I would contact the seller/agent and make sure they know you are serious about walking away from the deal if the tenant has not vacated.  If they need more time, you could amend the contact to extend your closing date and the date on which the tenant must have vacated the premises.

I would make sure your lender is aware of the situation.  I'm sure they will work with you.  

If you suspect that the owner has been lazy about getting rid of the tenant, you could be aggressive and lower your offer price to account for the month of revenue you'll be out having to wait.  

Yes, it is in the language of the contract. I don't want to walk away.  Sounds like we need to extend the closing date formally.

Originally posted by @Kathy Henley :

Yes, it is in the language of the contract. I don't want to walk away.  Sounds like we need to extend the closing date formally.

How motivated are your sellers?  Will your lenders let you close with the property partially occupied? I would not waste an opportunity to get a discount from the sellers and close on time, possibly a significant one.  Whatever hoops the tenants is going to put the owners through, if the discount is right it might as well be you instead of them.

Most buyers shy away from situations like this because they are a hassle. Hassles, perceived or real, are where the good deals are.  

I had a similar issue in St Louis, however I had nothing in the contract.   I inherited a deadbeat who never paid me any rent.  Then she left $2000 worth of damage & cleanup.  It took 6 months to get a paying tenant in.  

If you can delay closing until he is out, you can avoid complications.  Otherwise, you may be out $5000+ in your first few months.  (You don't want a discount where 80% goes to the bank.  You will need the cash.)

Update paperwork with the seller to seal in your deal and give them more time. If they wont update the paperwork then you have to weigh your options but I would put the responsibility on them as agreed. It may be the tenant and court system causing the delay.

Do you know if the seller is pressing forward or just taking their sweet time?

As mentioned above, I would make sure that the seller has the bad tenant out before you close as there could be damage that you would either want the seller to repair or get a credit for at closing.  If the seller can't get the tenant out by offering $500 or whatever to move so they can get the sale closed, think about what it will take for you to get the tenant out.

Good suggestions @Bob Hines @Jared K.

We don't want to walk away. We can't wait out the tenants request for an extension because we would loose our locked in low rate (4.125) since they have since risen.  Our property manager is not alarmed at the tenant needing to the end of the month to vacate. So we negotiated.

Our property manager, who will take over upon closing, suggested 2 months rent to be in reserve to buy the tenant's keys.  When approached, the tenant wrote a handwritten letter to his landlord, the sellers, that he will be out at the end of the month.  So the sellers declined to make any monetary arrangements, since they believe their lease-breaking tenant to be telling the truth.  The listing agent wrote us, the buyers, a guarantee that he will be out by the end of the month or he will pay us the 2 months rent.  This seems extraordinary.  Closing is this week, March 19.

He was a professional tenant. @Linda Weygant

The tenant did not vacate by the closing date, as promised. The listing agent wrote us the rent check.  The money came in handy to have lawyer file a paper and serve him.  He accepted the property manager's offer of $300 cash to be out by Friday.  He was.  

The unit got updated and the rent increased right on schedule.  It was the experienced property manager that guided us to success -- writing the contract to have the deadbeat tenant out by closing, financial penalty if the promise was not met; recognizing a professional tenant and going with the law right away and flashing cash in front of the deadbeat. 

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