Dealing with horrible tenants

[Walter Graham]

Hi fellow BP members, I'm currently under contract with a FHA loan on a duplex in Philadelphia and closing is today. The problem I'm facing is the property currently still had tenants that are in default on their rent, no security deposit and they are not compliant with the process of vacating. The sellers disclosed yesterday, that they don't have a valid lease. Any legal advice?

[Paulette Midgette]

@Walter Graham, Firstly, there is a valid lease.  Not all leases have to be in writing to be considered valid.  I posted here sometime back about leases written and unwritten.  I am not a lawyer but I know the law and the requirements for valid leases in PA.  A search should pull this post up.  Secondly, you will have to do one of two things.  Evict your tenants (in Philadelphia this is a lengthy process) or try to buy them out.  Either way you stand to be in the negative for cash flow for a number of months.  I hope you got this property for a steal in order to offset the loses you will incur from Day 1 of your closing.

The last rental I purchased in Philly had a tenant who was not compliant on rent.  I wrote into the agreement of sale that the tenant had to be compliant or the Seller needed to bring the rent up to a current status and provide 2 months future rent to cover me if I had to evict.  The tenant provide me with 2 months rent before I took possession of the property. 

It may be too late now, but in the future there are always ways to negotiate rents that are in arrears when taking possession of a property.  A quick post to BP may have saved you some aggrevation.

Good Luck!