New Property with Nightmare Seller and Tenant... Advice please!

17 Replies

Elaborate story here.. quite a nightmare. Please read through and help.

Setting the Table:

Property is in San Diego, California

Just purchased and closed on a nice primary home with a granny flat in the back that is rented. Due to the low offer and seller counter, i agreed to a 1 month leaseback for the sellers because they are moving into a new construction home and it may go over schedule. They stated they probably wouldnt need the full month and I woudl most likely be able to move in early. I required a $3000 deposit and a $250 per day fee if they go over the 30 day leaseback. The renters in the granny submitted a signed notice to vacate by the end of the 30 days as well. In the purchase contract, it stated that i was supposed to receive a copy of the keys to the property at close of escrow...

All seemed well and i felt like i covered my basis.. this is where it goes haywire:

15 days after close of escrow I still have not received the Keys; i've noticed them multiple times that i want to enter the property (24 hour notice) and they do not respond. They did respond one time and when i went there, nobody answered the door; while i was there i noticed the property was 95% empty with some trash laying around and and end table here and there. I reach out to the sellers in a nice manor via text and stated that i noticed the property was empty, i want my keys and i wish to move in early because i have tenants lined up to move into my current home and i dont want to live in a hotel with my kids for a week.

They responded to my real estate agent that they woudl give me the keys the following day and i could move in on a specific date if i released the full deposit now. We responded and stated that upon inspection, if the property was in clean order, i would release half of it the next day; i explained that the back tenant is not communicating with me and will not let me enter the granny flat so I'm concerned i may need the deposit to evict her. 

They responded to that with stating they will not give me the keys now and i cannot move in early; even though there is nothing in the home.


Back Tenant:

I notified the back tenant that was going to come by and take pictures of the property and that i needed to enter the residence. They responded that it does not work for them and i should contact them during normal business hours. I know i can legally just enter if i want to with proper notice but i dont want to ruffle more feathers. I responded with, What time works for you on Monday or Tuesday, and she will not respond.

What to do??

Main Home: My thoughts were that they have breached the contract by not providing the keys or allowing entry to the property with proper notice. My plan is to change the locks and post a letter on the door 24 hours prior stating due to lack of communication, failure to provide the keys, failure to allow entry, and perceived abandonment. I will do it based on the original date they provided in text that the property would be ready; IE, they originally stated that would receive the keys on the 16th and i could move in on the 20th if I agreed to release the deposit.

Granny Flat:

Not sure what to do there... help me out :)

Conclusion:

I guess i could just wait it out and get a hotel until they are out but it would be expensive and a real pain in the rear. I still have the 3000 deposit i will use to change the locks and apply towards a hefty cleaning bill.  I want the thoughts of the community. Please let me know!!

Thanks Everyone, I love this community!!

Sounds like a real pain, sorry to hear you're dealing with that crap!  I am by no means an expert, having only had 2 rental properties, but without knowing what else you put in your lease agreement, I'd say that there isn't much you can do with the main house until that month is up.  As for the keys, why did you leave the closing without getting them, if that was in the contract?

As for the granny flat, I'm not sure how the law works in CA, but I'm wondering how that notice to vacate relates to eviction?  Either way, I'm fairly sure there isn't much you can do either way until the end of the 30 days, and I'd consult an attorney before doing anything like changing locks or posting letters before that 30 days is up.

Just my $0.02, but I wish you the best of luck!

Thanks @David Sussman I was traveling on business when everything actually funded and closed. It was understood that they were going to give us keys at closing but they have gone dark on us... I was thinking of just changing the locks and then providing them a key if they ask for it.... we only have 13 days left until they have to be out...

You have to go by the agreement both parties have signed. If you have them 30 days and the time isn’t up yet, you have to wait. Just because they said they might not need the 30 days, doesn’t meant they won’t. If they do not leave after 30 days you can serve them with a 3-day Notice to move out and you can file for eviction. If they paid a deposit you have to be careful how and what you deduct as there are very specific rules for that.

Obviously, and you will likely agree, you have made many major mistakes in the handling of this situation. You should wait for the 30 day period to be up as agreed for the home owners. Do not change the locks, enter with notice. Do not turn over any deposit until they are out and immediately have your lawyer send a demand letter for the keys. My guess is you are going to have a major fight on your hands and you should turn this over to your lawyer to prepare.

As for the tennat...stop being concerned about ruffling feathers. You have rights as a landlord that you must inforce. Go in with notice do what is necessary and then turn this over to your lawyer. He will also need to be prepared to evict.

Allowing anyone to remain in the property after closing was a major legal mistake. You should have never under any circumstances allowed that to happen. You must now be prepared to pay a price. No good deed ever goes unpunished.

It is long past the point of being nice with these people...get down to business now. 

@Ross Y. what is California's landlord/tenant laws on abandonment? If you have confirmed the primary is abandoned, then you can likely just take it back.

With the additional unit, provide your notice and do what you need to do. Follow the lease and the state laws. Nothing further. Be professional with them but do not let them jerk you around. It sounds like they are already holding over and should have their notice served and eviction begun. No point waiting unless they do still have an active lease.

If I understand the story correctly, unless your jurisdiction says differently, these are your tenants and if they don't turn the property over to you, you will need to seek an attorney's assistance in evicting them both. 

Look into your specific county landlord/tenant rights. 

To your success!

The primary property IS NOT abandoned. It doesn't matter if it is empty or not. The agreement was to give them 30 days so you have to abide by that agreement.

You also agreed to let the back tenants remain for an additional 30 days. You can't do anything to accelerate that without violating the agreement.

Your option, as I see it, is to wait. You could give them notice of intent to inspect or take pictures but I don't see the point. The units probably aren't in any condition to take pictures or market. The tenants clearly don't want to help you. You should just let the clock run out - as agreed - and then deal with what's left.

And as @Thomas S. pointed out, learn from your mistake and don't repeat it next time.

@Ross Y. ,

I am no expert on CA law and this is not legal advice.

My perspective is, with the main house, your contract provides them 30 days and there is nothing wrong with them taking the entire 30 days to leave.  It makes no matter if you will have to temporarily reside in a hotel.  30 days is 30 days, and they have done nothing wrong until the 31st day.  And even on the 31st day, they have not legally done anything wrong.  The contract you signed provides them the option to remain beyond the 30 days as long as they pay $250/day.  They may just decide to stay for 12 extra days, leave the house in a clean condition, and instruct you to keep the $3000 deposit.  In fact, if I were you, I'd probably plan on that possibility.  Unless the contract allows you to begin moving in your stuff before the 30 days is up (and really, why would you want to if the previous owner is still going in and out?) I wouldn't get in a tiff over the keys.  All you can do is go in and inspect the place, but to what productive end if the previous owner still has access?  I would wait until they move out before worrying much about the keys.

Regarding the backyard rental, I think you have a stickier problem.  CA law is pretty friendly to tenants.  From what little I understand, if the tenant has been there two years or more (I think), it can take months to force them out.  Also, they may have a lease.  You said the backyard tenants "signed notice to vacate by the end of the 30 days" but you said nothing about any lease they may have signed with the previous owners.  Did the owners provide you the original lease?  This could get very tricky.  If the backyard tenants are not out at the end of 30 days, I would not attempt contact with them regarding moving.  You would need a lawyer at that point.

Good luck,

Randy

I am not an attorney but my family and I have been landlords a long time.  Knock on wood, we have never had to complete an eviction.  

Here are issues to consider: 1) a granny flat cannot be legally rented without owner being resident.  This may mean in effect the 30 days notice to primary may automatically apply to granny flat. 2) I believe there is never an abandonment if they are not arrears of the rent.  It does not matter that they are moved out.  3) they legally have 30 days.  You cannot start eviction until after that time.  

Unfortunately evictions in CA are sometimes difficult.  However there also is a low rate of evictions because rental demand is so high that most landlords do not accept tenants who have been evicted.  This means that a tenant who is evicted will have issues finding a nice place to live and therefore they want to avoid being evicted. 

Do not change the locks without consulting an attorney. Do not take possession of the unit early without consulting an attorney.  

Unless an attorney tells you otherwise I believe your hands are tied until 30 days after closing.  Ideally everyone has vacated but if not you should immediately start eviction.  You may also want to consider cash for keys.  

Not to scare you but there is a thread on BP of an experienced Ca landlord that has been attempting an eviction for years. I have not read it in the last 6 months so maybe his nightmare eviction is over.  

Good luck

Hi Everyone,

@Dan Heuschele , @Randy E. , @Nathan G. , @David G , @Bryan O. , @Thomas S. @Bob B. , @Jan Halasz

Thank you for the advice, it was VERY helpful in my decision and I'm maturing as a landlord because of it. @Dan Heuschele, I noticed you invest in Escondido and this property is in Old Escondido, I love this town and I'd like to treat you to coffee one of these days... I'm working on Mills act approval now!  I'll PM you if you're open to it.

I've owned property for quite a few years and I've never experienced a tenant that wanted to be almost as difficult as the law will let them. Especially since this previous owner made over 200K off of me with the purchase price.... ungrateful punks! 

I decided to hold on to the full deposit, get PODS delivered at my house, and go stay with my brother for a week or so until i can get in there after the 30th and assess what i need to use the deposit on; well within the law of course. If they do not return keys, I'll change the locks. They had 3 dogs, so I will clean the property, then get them the hell out of my life and continue on my RE journey! 5 properties in 3 years so far with quite a bit of equity!! Cash flowing enough to almost pay for this entire mortgage, not too shabby. Looking for Multi's now :) Thanks again team!

ONE MORE PIECE OF ADVICE NEEDED :)

I had the back tenant fill out an estoppel agreement that stated she paid an 800 deposit to the previous owners. My home closed on the 3rd of march and the previous owners collected full rent of 825 on the first from the tenant; previous owners did not give me a cent of pro-rated rent. I was going to chalk it up to "whatever" because i'm tired of dealing w/ crap and this is almost over... but now i see the deposit could potentially be owed by me since i bought the tenant. basically.. there is not a lease agreement. I was thinking of  using the $3000 deposit collected by escrow at closing to fund that if necessary and use the deposit as kind of a cash for keys strategy.. saying i'll pay your deposit back the day after I inspect and it's all clean, etc.   What are your guys thoughts??

 The purchase agreement should have stipulated that rents would be prorated based on the day of closing and that the security deposits would be transferred to you, along with keys, copies of any written lease agreements, tenant payment records, the original tenant application, etc. You own the property so the previous owner has absolutely no rights to the keys in the back unit or the security deposit or the prorated rent.

You need to stand up for yourself and put your foot down or they will just continue to rake you over the coals.

@Nathan G.

Nathan,

I dont feel I"m being raked over the coals... i didnt get the damn keys and those things mentioned in your post were all requested... rent.. deposit... lease (there wasn't a lease), etc. I am frustrated they didnt follow the contract. However there is only 10 days or so left and I'm trying to mitigate risk and not start a legal battle if all will just be well at the 30 day mark.

My question pertains to the back tenant and the deposit i already have on hand from the sellers and if i can use it to pay the back tenant deposit back.... they haven't responded yet but i asked the renter if they used their deposit for last months rent from previous owner... Trying to take path of least resistance and secure the property on the 30th. Thoughts?

@Ross Y.  

Most of my rentals are in escondido.  I agree with your assessment of the market as it seems to have highest rent vs purchase in ok or above area in San Diego.  Old Escondido is nice.  Have you gone to Cruising Grand?

As for your last question: I am used to it all being handled as part of the escrow.  The prorated rent, the deposit, etc.  I doubt you can keep deposit from the front tenant to pay the back tenant his deposit back unless the deposit was meant to be for both units.  You may need to eat this one. 

I have little time but would like to network more than I have.  Maybe a mutual drive by each other’s Escondido properties at some point in the near future.  

Good luck

I agree with @Dan Heuschele in his last comment above.  I understand that your part of the settlement must have been remote, with you not present due to travel.  That only makes it MORE incumbent on the settlement agent to adhere to the written agreement terms, and account for the assignments of rents and prorates, etc.  Not so sure about their responsibility to collect keys?  That is MY JOB as a purchaser, at settlement, and I would make certain someone would represent me in person, in my absence, at closing, to get the keys. 

Once the settlement occurred, essentially ALL sales contract terms "merge into the deed." Meaning, if I am recalling all of this right from Law School;) (Note Disclaimer: I am NOT an Atty or providing any legal advice here), that once the deed is transferred, the sales contract terms become irrelevant and probably not enforceable thereafter?  Leases, yes. Sales contract terms, no.  

Anyway, a good lesson to us all.  I have made similar, more minor and luckily not problematic mistakes similar to yours, 2 months ago on the purchase of 9 units, so we all can make mistakes. I inherited 9 tenants and forgot to require an estoppel from the seller as to the deposits, rent roles, etc. 

Oh yeah, another law school lesson I found useful and amusing, the "Call Girl principle."  Once services are rendered, the chance of collecting fees or payment decline...greatly.  LOL!  Once you paid the seller, you lost your leverage over/with them to a great extent. They are taking full advantage of that error apparently.  Was the seller a lawyer? 

The tenancy you created thereafter, is completely separate from the rest. 

I applaud you for maintaining a good attitude, planning to extricate yourself as quickly, safely and with the least amount of pain, and moving on with your life. Also your NOT doing anything that would have constituted an illegal, constructive eviction.  Watch "Pacific Heights" again!

This post has been removed.

This is more of a legal matter than an investing matter. But don’t play nice. Their kid is dying, they have cancer....I don’t care. Because then things get even messier. They obviously dont take you seriously and aren’t concern for your needs all. 

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