Seller hides phony eviction during contract

[Ryan Cleary]

Just closed on a long distance deal.  I “was” buying duplex with one unit occupied and one unit vacant.  I ended up buying a duplex with both units occupied and the new tenant not paying any rent.

So in short, contract was extended to 60 close because I was selling another property to pay for this one.  The contract, inspection and appraisal were all performed with one unit vacant.

I still can’t understand the thought process but the seller decided that he didn’t want to wait the remainder of the contract without receiving any income on that side, so he threw a tenant in there who never paid any rent.  So the seller started the eviction process with the eviction date as the date of contract close.  Nothing ever was followed through.  Nothing was ever disclosed, not even to the listing agent.

So now we receive the keys and find someone living there.  We immediately post a 3 day notice/ cash for keys but how do I proceed with the seller?  

[Joe Splitrock]

@Ryan Cleary as someone who has sold multifamily and placed tenants while under contract, I can share the thought process. Deals falls through or buyers delay closing (as you did). As a seller, you don't want to lose that income while you wait and you assume the new buyer will be happy the property is fully leased. I would never place a tenant without screening, but if the agreement didn't specifically prohibit me from leasing a unit, I would lease up any vacant units. 

The question for you is why you never had a walk through inspection on the day of closing. You never want to close on a property without walking it right before you sign paperwork. Too much risk. Not only due to surprise tenants, but it is not uncommon to have property damage show up after you go under contract. The seller may not even know. It is far better to negotiate before closing than after closing.

I would proceed with the eviction (no cash for keys) and ask that the seller cover the cost. Ask them for the full amount and they may agree to split it. Most contracts have provisions for arbitration prior to court. Most sellers will agree to something just to make it go away. I have had to do this two times after closing, where defects were covered up during the walk through.