Sellers are having trouble getting their renters out. What to do?

Question

I'm set to close on my first property on the 20th. It'll be a house hack duplex in St Paul, MN. Just a few hours ago my realtor called me to say there was a problem: the renters want to stay. It seems that the sellers (there's six of 'em, btw) are having trouble getting them out. Maybe they didn't give the renters notice because they didn't want the vacancy if I didn't close. I'm mostly guessing on that.

So, what should I do? Minnesota seems to be a tenant-friendly state, so eviction could be costly if I close and then have to evict. (Could somebody throw me a ballpark figure on that?) Do I close, and then sue for damages (is this even possible)? Do I wait until the sellers handle it, however long it takes?

My plan was to close on the 20th, and then move in during the first week of October. I'll occupy the lower, do some work on the upper, and then get it rented ASAP, hopefully yet in October.

Thanks guys,

Eric

Account Closed · Answer

Don't count your profits yet as the tenants aren't gone. No closing until you see the lower unit empty, it's the seller's problem to get them out. Maybe the whole family will move together, just hope they don't trash the place on the way out. Good luck.

Eric Bate · Answer

@Shane Hedeen Will do. The lower was on a month-to-month lease, separate from the upper, and our original closing date was September 1st. I had to push the closing back to accommodate the LIFT downpayment assistance program. So the sellers should have had plenty of time to work this out, yet they've only brought this up now.

I do have copies of their leases, and I spoke with the tenants after the inspection period. They had said they knew the house was for sale when they moved in, and were planning on moving out when it sold.

***** So what I'm wondering is this...

Let's say I wait to close until they're gone. In the meantime, I'm still paying rent at my apartment (almost $500/mo), yet the rent paid by the sellers' renters would still be going to the sellers --- I only get the rent money prorated from when I close. And once they're finally gone, it'll take me some time to re-rent it (roommate in the lower, eventually new tenants in the upper) --- which will be difficult after October. That's a lot of money lost, by fault of the sellers. I also need to owner-occupy one of the units to qualify for the $7,500 downpayment assistance I'm getting. So I need them gone; it was the sellers' responsibility to get that done; and it's gonna cost me a lot of money because they didn't.

I think my strategy here will be to wait to close until they vacate, but ask them to make a concession on their selling price to reflect the costs I'm incurring. The question is then, "how much?"

Shane Hedeen · Answer

@Eric Bate,

Thanks for posting. Congrats on the first property.

Do the people in the lower unit have a separate lease? You mentioned it being a family. Do you have access to their lease? I would advise yourself, your agent and potentially a lawyer to read the lease.

Stick the sellers to the PA they agreed to. If those people have a signed lease though also through October, to use the whole building then my question would turn to - Why would a closing date of Sept 20 be chosen if they have a legally binding contract to be in the building through October? That's why I circle back to the lease. If the people living in the lower unit are also on the lease for the upper unit, you have a bit of a messier situation. Your PA is legally binding - so could be theirs as tenants.

Best of luck working this out. Hopefully they get them out of that unit for you here shortly, or you are going to have to speak with your agent and a lawyer about remedies and solutions.

Bottom line - you may want to invest some money into a real estate lawyer. No answer, including mine, on a forum post on the internet, is going to help you as much as a lawyer and your agent if they are knowledgeable in the situation. In spots like this, they are 100% of the time worth their cost in my opinion.

Best of luck man, hopefully it gets sorted out well. Make sure to wrap us all up on how it turns out here on the thread!

Max T. · Answer

stick to the agreement. no closing until the lower unit is vacant. push back your date and renegotiate the price if you have to. seller's aren't holding up their end of the deal.

Andrew Glenn · Answer

Congrats. Glad to see this worked out well

Eric Bate · Answer

Epilogue: The deal is done. We moved the date to Oct 3rd, by which time the tenants would be gone, and I signed an as-is addendum. I did my final walk-through on the 2nd, and I was super impressed with the condition they left it in. Lawn was mowed... lawn mower was left behind for me. Floors were swept, fridges scrubbed down. I needed to replace a flapper and chain on one toilet, I rekeyed the locks, and I'll need one light bulb. Other than that, the upper unit is ready to go.

Thanks for the advice, you guys! I'm pretty excited about having done my first deal right now.

Marc Jolicoeur · Answer

I believe leases in MN are legally binding even if the property changes hands. So that means if the tenants do not leave as expected you will be required to stand by the lease. Even the month-to-month requires proper legal notice to be made before the lease would terminate. Depending on when and how notice was given to the tenants, it could require you to wait an extra month or so.

Good Luck

Shane Hedeen · Answer

Smart man. It sounds like you are buying the property for long term wealth building. It's best to keep the focus there. It's very easy to get caught up in the heat of the moment of something and lose sight of the end goal. Congrats on them (hopefully) being out by then and the new property!

Eric Bate · Answer

Just got a text from my realtor: "Oct 3rd..both leaving".

I'm happy with that. So long as it comes true, of course. I cooled off since my first posts, and didn't issue that list of concessions. The sellers are getting their tenants out, and I'm getting the property, and that's all I really want. The nickel-and-dime thing I was about to do, in retrospect would have been tripping over pennies on the way to dollars.

Jeff B. · Answer

Try the Cash For Keys approach. You need possession asap, they need a deposit for a new rental (likely they've not even begun searching). Offer 50% of their current deposit for the keys and get a written Release of Lease, date, amount in trade for $xxx at surrender of the keys. Everyone signs.

Sellers are having trouble getting their renters out. What to do?

Sellers are having trouble getting their renters out. What to do?

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