General Real Estate Investing

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David Moudy
  • Property Manager
  • Indianapolis, IN
25
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39
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Tenant Napped! A learning experience

David Moudy
  • Property Manager
  • Indianapolis, IN
Posted Aug 7 2019, 19:15

Would love to hear thoughts on this:

TL/DR: First Key Homes lied and took our tenants. A learning experience.

Want to share something that has recently happened.

We closed on a home recently that had a tenant in place.

During due diligence we asked for lease ledgers, copies of leases.

Everything looked good, and during walkthrough of property talked with tenants, they let us know that they wanted to stay with the property which was great.

During escrow period our buyers and us were asked not to communicate with tenants until after closing about change in property management or anything about transaction. Understandably so we thought because don’t want to confuse tenants about who property management was just in case we didn’t close. Perfectly reasonable request.

Per contract we stated prorated rent amounts were to be transferred to us at closing as well as security deposits.

We honored request to not reach out to tenants until after closing. The tenants lease was up in September(next month) so we knew we would need to reach out to renew leases directly after closing.

Day of closing we reached out to the tenants to inform them that we had indeed closed on the house, as well as wanted to offer lease renewal for them. When received a response back from them:

“THANK YOU FOR THE OFFER BUT FIRST KEY HOMES TOLD US TO VACATE DUE TO SELLING HOME WOULD NOT LET US KNOW IF THE NEW OWNERS WAS A RENTAL CO. SORRY , WE HAVE MOVED AS OF FRIDAY”

We later found out that the tenants were placed into another First Key Homes Rental property.

Can anyone say Tenant Placement Fees?

Leaving the property at close vacant, which is not the product we intended to close on and we were told not to contact tenants until after close.

Tenant snatchers?

Where not ideal, we now have to turn the property and didn’t have the luxury doing a move-out with the tenants. Can only move forward from here.

Moving forward action steps to help prevent this from happing again a few thoughts:

Further condition:

Current tenant(s) to sign lease with new property management company prior to closing.

Tenants to be informed of property management change 7 days prior to closing.

Closing contingent upon current tenants remaining with the property post closing.

Would love to know what your reactions to and or response would be to this.

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