Great news! I close on my first property (duplex) on Tuesday, but have encountered the first obstacle.
The seller provided notice to the tenants that the lease would end June 30. Unfortunately, they are still in the property and from driving by, it doesn't look like they plan to leave any time soon. Wisconsin Statute 704.23 simply states that I can "proceed in any manner permitted by law to remove the tenant and recover damages." That is pretty vague, so I'm wondering what I can do? Does that mean proceed with the eviction process? Does that mean that I can contact the sheriff and have them removed?
Rehab is scheduled to start next week with an open house the following weekend. I'm on a tight timeline and trying to figure out how to mitigate this issue.
I know I can try cash for keys, but need to know what my next step is.
Thanks in advance!
A little more information is needed...
Is the closing contingent upon tenant vacancy? Do you get a final walk thru before closing Tuesday? If so, use your final walk thru to delay the closing until the seller can provide you with a vacant property.
I would never take possession of any occupied property where vacancy was a contingency.
Read the lease see what the legal situation is. Talk to the tenant and see what his/her situation is. See if there is an answer that both parties can win. I try to work it out amicably if at all possible.
Other wise give it to the attorneys and wait a year +/-some time, dependent on your state laws and the lease agreement.
@Tyler Kennedy Having Grown up near madison and knowing how I’m pretty sure the tenant/landlord laws fsvor tenants i have a hard time believing you can just have the sheriff remove them.
You’ll likely need to evict and make sure you do it properly. I never understood the cash for keys thing but you can try that I guess.
@Denice S. Closing is not contingent on vacancy. I do have a final walk through Monday, but don't plan to delay closing as a result.
@Caleb Heimsoth Not actually in City of Madison, but still in Dane County.
@Carl Fischer It seems that I'm going to have to talk to the tenants and understand what's happening and if I can solve that problem. Maybe pair that with Cash for Keys. Eviction is last resort.
Always contact an attorney for advice on landlord/tenant issues, especially when it comes to evictions.
Here in PA you would need to evict them. Does not matter if they have a lease or not. It is their home and you cant force them to leave without a judges order. IF you buy it with them in it you inherit the tenant and will need to evict them. I dont think a lease will matter because if it ended and they did not leave you still need to evict them. You could try to push closing back if it is not vacant before you buy it.
@Tyler Kennedy Cash for keys is always a great option, you may want to have a simple conversation with the tenant you may be able to come to terms on a deal that makes sense to you both. In the meantime, speak to your lawyer before closing to see what your recourse is hear based on your current city/state laws.
Good luck. I always put a 50% increase in rent if the lease lapses and tenants are staying. It helps to get them moving. Good luck! Always something when you own real estate.
If you close with them in there, they're your tenants. If they refuse to leave, and rejected cash for keys, you will have to evict. If that happens there is absolutely no way you'll start rehab next week, probably not next month.
If I’ve read correctly, this is your first deal and your plan is to flip this property within 1 week of ownership and you’re looking for a way to not take on the occupant?
If that is the case, and you really are trying to mitigate risk then there must be something you can do to postpone closing and make the seller deal with the tenant. How about the property not being broom clean, or not in substantially the same condition, or the presence of an unauthorized occupant. Anything? I simply would not go to the closing table.
However, it sounds like you are either legally bound to close or determined to close and hoping there is a quick way to make someone leave so you can execute your plan.
So, yes, try cash for keys but call an attorney to see if you need anything in writing. Also, you are within your rights to ask for a credit at closing for the unexpected costs of having to evict or buy off an occupant.
If the occupants don’t respond to cash for keys then just do your best to look on the bright side.... This 1st deal has the potential to teach you about tenants rights, squatters rights, courtroom hearings, judges, cash for keys, cost of evictions, mitigating risk, going over budget, going over timeline, and maybe you’ll become a landlord in the process. Most investors have to learn these lessons little by little as they grow.
Best of luck, keep us posted.
How do you schedule rehab without knowing when property will be vacant? How do you schedule an Open House if property is not even closed yet? AND you do not "know" eviction laws for the county you are buying in? Sounds to me like you have a real problem not knowing a realistic timeline for your project. Checking occupancy, tenant laws, eviction procedures ALL should have been done long before now to have any realistic ability to make plan. You do NOT have a "timeline or schedule" sounds more like a "dream"of how you hope to have it progress but that has a zero chance of success.
Was current owner trying to "break " tenants current lease or was the tenant out of lease and on a M2M? If so WI only requires a 28 notice to vacate. If tenant does not vacate in 28 days, normal eviction procedure to follow. You can not have sheriff forcefully remove with out an eviction, Unless they are squatters.
If tenants are still under lease, you will need to buy them out or honor lease. Education is key in this biz. Its great that you have a timeline, but you have bigger problems ahead before the rehab.
You can hold the seller responsible for failing to evict them, assuming that was part of the buy contract. In msot cases you would have to negotiate a discount on price with the seller and add that to the closing statement. Or if there is a ascertainable dollar amount attached to the breach perhaps you can just have title add it to the closing statement. Or if you have an attorney handle closing perhaps you can assert a certain damage figure and require them to accept it at closing or you walk away. Would need more information to determine the best course of action here.
Hi @Tyler Kennedy -
Any update here. Wishing you much success on your first project and bummed it sounds like a bumpy start.
@Paul Haviland Hey! Thanks for checking in. Not sure if you’re still going to any of the local meet ups but would love to catch up sometime.
Turns out the tenant was moved out before closing, but just a day after the lease ended. They left plenty of junk behind, so a bit more work and expense there, but everything else is underway nicely. Remodel making progress, and several showings to lease beginning Aug 1.
Plenty of learning opportunities of what to look for during walk through, and setting up the deal.
Congratulations on your new property! Glad to hear the tenants moved out and your moving forward nicely. Best of luck.