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Joe Gugelman
  • Fort Wayne, IN
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Inherited non-paying tenant with no lease! Help!

Joe Gugelman
  • Fort Wayne, IN
Posted Aug 7 2014, 23:01

Sorry for the length, but I have a very specific scenario that I haven't been able to find advice on after extensive searching. 

I just purchased my first rental property, a quad-plex (in Indiana). It was supposed to close on July 1, so on June 30 I met with the one existing tenant and got an estoppel in place with her. After our meeting, I visited the property one last time before closing to see if the repairs we'd agreed upon were completed. They were not. Needless to say, we didn't close on July 1. After threatening to back out, the seller threatening to go to arbitration, we worked it out.

We closed on July 31. Less than 24 hours before closing, my agent mentions that in the period of time that it looked like the deal was dead, the seller's agent/property manager placed a tenant in a unit. At the closing table I find out the details; It was a tenant he'd had at another of his properties who had roommates abandon him, so he let him move into the unit in my building on July 22, collected a $50 security deposit (which I received a credit for on my HUD statement), and $100 for rent to cover 7/22-7/31. He'd planned to meet with him on 8/7 (tenant's next payday) to get a new lease in place and collect for the month of August.

I was a little weird-ed out, since I had no time to do my due-diligence by meeting with the tenant before closing to get an estoppel and talk about getting him under my lease agreement. I was assured that this had been a solid tenant for a year, so I didn't blow the deal up (again) over this. Figured it'd be nice to have two of the units filled from the jump with no turnover/advertising costs.

So, the day after closing (Aug 1), I meet with the tenant to discuss getting him under a lease. I was ok with the rent amount he'd agreed to with the previous manager. He was too, but was under the impression that he wouldn't be paying for gas service, even though the former manager told me that they'd agreed that he would pay all utilities. He also had a small chihuahua that I was told he'd be willing to give to a neighboring family member (I'm going to make this a pet-free building), he didn't seem so keen on the idea. When we suggested pro-rated rent to take us to his payday, he acted like he didn't have any money. 

Trying to keep this thing together, I suggested that he take the weekend and figure out his budget and if he'd be willing to part with his pet. He promised to get back to me on Monday. He did text me bright and early Monday morning and let me know that he'd be moving on, but thanked me and my partner for our time and effort. I thanked him for getting back to me, and suggested that my family members (realtors) would probably be able to help him find a new, pet-friendly place for he and his dog.

No reply for two days, so I text him on Wednesday of this week, asking how the house hunting was going. He said "not my my plan but its still going." I told him I'd be stopping by the house to start a check-list for getting the other units ready that evening, and we could talk about it then. He said he had important errands to run. I told him we'd be there for a while and he could text me when he got home. He said "ok" and I never heard from him.

I text him earlier today (Thursday) and asked him to please contact me when he gets off work. Told him that if he's planning on staying, we need to get him under a lease and collect rent for August, and if not, we need to start prepping the apartment for another tenant and therefore need to discuss his plan to vacate. He never contacted me.

So to recap in case I lost you in the middle, he has no lease agreement with either me or the previous management for this property. He paid $100 for the last week of July, and I hold a $50 deposit that I received at closing. So I ask the experts, what are my options? Do I have to go through the full eviction process? Is paying one week of rent with only a verbal agreement to sign a lease in the near future enough to invoke tenant's rights? I have no leverage with such a paltry deposit, so I worry about damage on the way out. Do I file a pay or quit (not trying to get him to pay anything, just vacate), or just go for an Immediate Possession? Help!

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