Buying apratment building at courthouse door.

3 Replies

I am looking to buy an apartment building at a courthouse door auction.  I have done some research on the apartments including talking to one of the tenants and I believe it will cash flow well.  My question is what steps do I need to take or what is the best way to get copies of the current lease agreements and how do I get the tenants to sign new leases? 

 You need to find out if the note being foreclosed is in first position. You also need to see if there any senior liens or judgments in front of it, and if those are wiped out my foreclosure.  If you don’t figure out how to buy foreclosure you can make really big mistake. That should be your first concern. 

As for leases, I wouldn’t worry that much about them. You’re going to have to make new leases anyway.

Originally posted by @Casey Mericle :

 You need to find out if the note being foreclosed is in first position. You also need to see if there any senior liens or judgments in front of it, and if those are wiped out my foreclosure.  If you don’t figure out how to buy foreclosure you can make really big mistake. That should be your first concern. 

As for leases, I wouldn’t worry that much about them. You’re going to have to make new leases anyway.

 Well...if it's in first position, by definition there wouldn't be any liens in front of it and by logic, there wouldn't be any judgments in front of it. Could be but no lender with half a brain is going to lend in first position with a lien in front. Just sayin...Other than that, I agree with you for the most part. Also, maybe Kentucky is different but here, leases survive foreclosures and I'm pretty sure the CFPB is gonna make you honor existing legitimate leases as well.

@Jeremy Pollock  

I would suggest you get each tenant to complete an estoppel letter.  This letter will indicate if there is a lease and what the terms of the lease are.  

If they indicate they are under a current lease then have them provide you a copy of the lease.  If they can produce the lease then you have to abide by it until it expires. If they cannot provide a copy, I would try and enter into a new lease with them and make a statement in the new lease that the new  lease supersedes any other lease.  Otherwise, call your attorney.

If they state the lease has expired, treat them as you would a month-to-month tenant.  If they say there was a security deposit then you will have to deal with that.  You will probably end up being responsible for the deposits.  Check with your attorney.

Hope this helps

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