What if seller won't leave after close of escrow? (CA)

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What if seller won't leave after close of escrow? (CA)

Shari Posey
Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes

Would one have to evict a seller who won't leave on the day it closes escrow (as the contract states) or is there a simpler legal method? This is question pertains to sellers in a short sale transaction who have no money for a rent back.

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Wayne Brooks
Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
10y

Your standard contract, if it calls for possession at closing, means the seller is out Before/at the time of,  the actual closing.  You typically do a final walk through a couple of hours prior to closing....if it's not vacant, don't close.

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  • Wayne Brooks
    Real Estate Professional · West Palm Beach, FL · Member since 2012 · 23k+ posts · 13k+ votes
    10y

    Your standard contract, if it calls for possession at closing, means the seller is out Before/at the time of,  the actual closing.  You typically do a final walk through a couple of hours prior to closing....if it's not vacant, don't close.

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y

    In California, the walk thru is typically done three days before closing, the loan funds the following day and records the third day. The standard contract says the seller must be out by 6 PM the day it closes escrow. It is very common for the seller to move out the day escrow closes and not before.

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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    10y

    I know CA law is tenant friendly and I am not at all familiar with it. 

    It may be that it would not be considered an eviction because she is no longer a tenant. In MD you would file for "Unlawful detainer" this is a similar to an eviction but different process. If CA has a similar law it may be easier than an eviction.

    I presume she is getting no money from closing because it is a short sale. If she is, it could be withheld until she is out.

    However this can be a real problem. 

    check this thread, one of the longest here on BP, but could be your same issue. 

    https://www.biggerpockets.com/forums/67/topics/649...

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y

    I read that horrific thread last night but I was unclear if the occupants were the former owners. It sounded like the owner actually moved out and it was the owner's boyfriend who was squatting needing to be evicted. It might be the exact same problem and process whether it's squatting by the former owner, a non-paying tenant or a friend of the owner who decided to move in during the short sale process even though the seller leaves. That's my question.

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  • Michaela G.
    Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
    10y

    In 2010 I bought a house in Moraga, CA - preforeclosure. The seller was out at closing, but his friend/roommate wasn't. 

    I had to go through an eviction to get him out. 45 days or so

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  • Jorge Vega
    Specialist · Northridge, CA · Member since 2014 · 40 posts · 8 votes
    10y

    @Shari Posey  If its a Short Sale, is the seller receiving any funds for relocation ? HAFA pays out $10,000 from the proceeds of the sale if the occupant qualifies.  If they are you can ask escrow to hold those until the seller vacates the property. If the transaction has already closed and the sellers still will not leave and you have tried everything else then I would say evicting them will be the most effective option.

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y
    Originally posted by @Jorge Vega:

    @Shari Posey  If its a Short Sale, is the seller receiving any funds for relocation ? HAFA pays out $10,000 from the proceeds of the sale if the occupant qualifies.  If they are you can ask escrow to hold those until the seller vacates the property. If the transaction has already closed and the sellers still will not leave and you have tried everything else then I would say evicting them will be the most effective option.

    Not HAFA but seller getting a lesser amount, which is evidently not enough to temp him to leave. BUT, that's a great idea to see if seller agrees to have escrow hold his relocation funds until seller vacates. 

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  • Jim Keller
    Investor · Riverside, CA · Member since 2014 · 351 posts · 220 votes
    10y

    Sorry to hear your in this place I have been there before and it hurts.  You want them out focus on that, but plan for the worst.  I would set an oppontment with all of the "tenants"  tell them you are the new owner and ask them nicely if they didn't live there where would they live.  Then where ever they say tell them you would like to HELP THEM do that with a gift of $2,500.  We make it a habit of offering almost the most we would ever give.  We have had people cry in front of us just because they had no other plans and the money really helped them.

    I tipicly tell them if they want to move forward and get the money they need to move in a mater of days.  If they dont want to do it or you feel like they never will I would tell them you have to confer with your partner and will come back with the best offer tommarrow.  Come back sweeten it by $250 or whatever you can if they don't agree sure them with a eviction notice.  If you have no experiance bring in a company to represent you and get them out.  

    Good luck

    Jim

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  • Jorge Vega
    Specialist · Northridge, CA · Member since 2014 · 40 posts · 8 votes
    10y

    @Shari PoseyHow much are they receiving for relocation incentive? If they occupy the property were you advised why the sellers didn't qualify for HAFA?

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y

    Fannie and Freddie don't participate in the $10k incentive--$3k is the max. 

    The buyer is NOT the owner yet. 

    Regarding cash for keys, a figure of $5k to buy some personal items has been floating around. 

    My question is...Is the legal process different for a seller not vacating compared to a tenant not vacating? Is the process different because the seller willingly agreed to sell and leave at close but then doesn't leave? I'm naive because it seems to me that the buyer can just pull up a moving truck on the day it closes and just start putting stuff in the house or start painting, whether the seller's stuff is out or not. (I know that's not how it works, but it should.)

    I do like the idea of having the seller sign a amendment that escrow will hold the relocation allowance until he vacates, AND for the seller to vacate one day prior to recording and if not, it will not record. 

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    "In MD you would file for "Unlawful detainer" this is a similar to an eviction but different process. If CA has a similar law it may be easier than an eviction."

    Unlawful detainer IS eviction.  If you closed without the escrow company acquiring the keys, THEY FAILED YOU - - make a claim against them.

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y

    In our area, escrow doesn't handle the keys. Seller and buyer don't meet in an office for a key exchange. The keys put in a lockbox on the property or the listing agent has them and hands them over at 6 p.m. the day it closes.

    Oddly, it's common here to give the seller 3 extra "free" days after close of escrow to vacate the property. For all the lawsuits we have in California, I am shocked we do it the way we do. 

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  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    hmm;  When I bought our multi-units in Calif, our escrow agent was far more professional.

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    Hi @Shari Posey,

    So in California you are not able to verify a seller has met the terms of the contract before closing? Here if the house was to be delivered "In broom clean condition" and they were still in there at Final Walk through or if there was something in the contract that they had to remove an old oil tank from the basement or replace a window and it wasn't done there is no closing.  I just find it so odd that your lawyer would have you sign the final paperwork with her still living there leaving you with all the risk. I am learning so much about California

    Thanks!

    1Reply
  • Steve L.
    Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    10y

    We always have escrow hold at least 5k-10k after closing until the house is vacated.  If they are there and won't leave you have to evict them.  It will likely take way longer than 45 days.

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y
    Originally posted by @Steve L.:

    We always have escrow hold at least 5k-10k after closing until the house is vacated.  If they are there and won't leave you have to evict them.  It will likely take way longer than 45 days.

    It's a short sale so seller has no money--nothing to hold back.

    Typically the walk through is done 5-3 days prior to closing, so usually there is still furniture, etc. in the house.

    Escrow offices function as a paper pusher--the don't force either party to comply with the contract, they just move paper around and follow directions of each party according to the contract. They are a neutral party. 

    There are no attorneys involved in sales--it's all done between real estate agents. Not until there is a problem do you bring in attorneys, and principles usually sign arbitration agreements in the offer anyway that prevent anything more than small claims court.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mike Cumbie  we don't use lawyers on the west coast.. and we don't have wet closings.

    buyer and seller rarely if ever meet... all closing are handle by Title and escrow companies.. Escrow officer is in charge and reps both buyer and seller.

    sometimes seller will leave keys with escrow officer with instructions to give them keys when the deal funds.

    on the west coast we sign  fund then record its not done until you RECORD... which is usually 2 to 3 days after signing and money is exchanged.

    @Shari Posey  if you can't shame them into leaving and you can't do cash for keys you will have to do Unlawful detainer.. I know of no specific law that prempts tenant rights they are a tenant in sufferance

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    Thanks @Jay Hinrichs

    You learn something new everyday, quite interesting.

    What happens if you both agree on a sale price say 200K. In your agreement they are to replace the carpet in the laundry room, paint some exposed wood and remove a barrel of toxic waste from the yard. You go through the walk through 3-5 days earlier and none of it is done. Do you still continue down the path and then after all done have to take them to court?

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mike Cumbie  Items are to be fixed during escrow period then a re inspect.. so you would re inspect say 7 days before closing... and you could delay at that point or negotiate a hold back or whatever the parties agree to.

    When we sell our new construction we will do a punch list walk through about a week before close.. but they have a one year warranty and we know we have to come back at month 11 for misc stuff.

    I think the other thing you will find with WEst coast VS an attorney state is that our closings are generally MUCH smoother and much more timely.  When you have a buyer with an agent and an attorney then a seller with an agent and an attorney it just takes longer and frankly there are all sorts of boo boos a last minute changes from the attorneys etc.

    A first class escrow officer on the West coast is FAR more efficient than having two attorneys handling a simple house purchase...

    Nothing precludes either buyer and or seller from having an attorney on these deals its just never done and frankly not necessary. Also a very good and experienced BRoker will help as well.. But again our Escrow officers on the west coast that have 10 to 30 years experience they are rock stars.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mike Cumbie  The other major difference since we are on the subject

    is our title plants on the West coast are state of the ART.  we don't have title abstractors.. each title and escrow company will have their own title plant that has 99.9% of all counties records digitally in their data bases ..  I know when I first started doing business in SC which is attorney. and would open an order with an attorney they would not even start the title work until well into the process.. ( because they have to pay for an abstractor to physically pull the title and make a report)  We can get this info in 4 to 6 hours and have a title commitment same day... but next day if its a rush and standard service is 2 to 3 days if no rush... Its one of the main advantages we have buying distressed assets.. I can call my customer service rep and on the phone with just an address get a complete date down on the phone... NOw its not a title commitment and there can be other issues. but it will give me all the lien info mortgages or DT's IRS  child support etc etc.. to make sure I want to waste time even looking at a potential buy.  We rarely if ever have to quiet title either.

    And then each title and escrow company will have one staff or maybe two staff attornies for an entire metro area... they only get called in when you do have a complicated case.

    Like right now I am doing a specific performance action here in PDX... And the title companies attorney wrote us and told us how he wants to see the Judges order so he can then issue title insrance.. so we get stuff proactively not after the fact.

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  • Mike CumbieBusiness Member
    REALTOR® · Brockport, NY · Member since 2015 · 3k+ posts · 4k+ votes
    10y

    Thanks @Jay Hinrichs good info!

    Yeah the only thing more efficient at slowing things down than a lawyer.... is 2 lawyers. Some times we can get real lucky and have 3 or 4. While I never planned on working out West, it is good to know because you never know when you will end up getting yourself involved in something out there. Glad I know that I have to really dig in and do some more research instead of "assuming" things were pretty much the same.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    10y

    @Mike Cumbie  I think you will find coming to the west to do business is far easier than us west coast guys coming east and trying to figure out all the complicated east coast stuff.

    You guys earn your dough I can tell you that... !!!!  Not that I could not learn it and figure it out but its far more taxing than what we do here

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  • CJ Martins
    Investor · Hawthorne, CA · Member since 2014 · 5 posts · 0 votes
    10y

    If your buyer is a seasoned investor and your feel there is a enough skin in the deal, go ahead and close escrow with the seller in possession. Because this is a  short sale, if the short sale approval letter expires, you  might start a fresh to initiate the file with the short sale lender and it is not a guarantee that it might be approved or the lien holder might pull a fast one and foreclose on the property.

    I don't know if the subject area is in a rental control jurisdiction, even if, all it takes to get rid of the seller is minimum of 45 days with an experienced eviction attorney.

    However, make sure the seller has signed the grant deed while the drama is going on, otherwise, it might be a dead deal.  Sellers in short sale are getting a lot of calls from people promising to keep them in their homes for more than 3 years. Make sure escrow is on top of the game; collecting all necessary signatures from the seller.

    This is not a tough situation!  Just handle it in a professional way.

    Wish you all the best!

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  • Shari Posey
    OP
    Residential Real Estate Agent · Long Beach, CA · Member since 2008 · 432 posts · 63 votes
    10y
    Originally posted by @CJ Martins:

    If your buyer is a seasoned investor and your feel there is a enough skin in the deal, go ahead and close escrow with the seller in possession. 

    However, make sure the seller has signed the grant deed while the drama is going on, otherwise, it might be a dead deal.  Make sure escrow is on top of the game; collecting all necessary signatures from the seller.

    Buyer is a young family with kids and wants to live in the house.  Seller has signed everything necessary and it's in escrow. In fact, everything was going smoothly until the seller just said he wants to stay 15 days after close to "give him time to move" and he put suggested prices on various personal items for sale to the amount of $5k or else he might just cancel the deal and stay in the house living for free. That's why I am asking about worse case scenario if a SELLER doesn't leave like he is supposed to and/or how to structure an agreement that makes sure he's out prior to closing now that this issue has come up at the 11th hour. Like I said, I've done a lot of transactions and never had this particular issue. In some ways it seems like a worse situation than a tenant because an owner of a short sale doesn't care about eviction since his credit is shot already.

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  • Jack R.
    Flipper/Rehabber · Las Vegas, NV · Member since 2014 · 124 posts · 35 votes
    10y

    Terrible situation to be in, and it happens. In our RPA's, in the delivery of possession paragraph, the seller pays $200 a day, for every day past close of escrow, for violating the agreement. The monetary amount we ask for increases if there are tenants. The bottom line, is that the seller is accountable to delivering you the property, now it still may not help with you squatters etc. but at least you now have a financial stick, and hopefully a motivated seller. The other option is to delay closing or, hold back funds at close, until the situation is remedied.

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