Owner Occupied, FHA route, Who gets the boot in a multi that has no Vacancies?

9 Replies

Hello BP,

This might be an easy question but i cant seem to pull in thing up specific when using the search field. Its one of those question that are kind of hard to word correctly for the search. Please feel free to link any past posts that may help me.

Say a small multi is for sale (2-4 units) and the current owner doesnt live on the property. Now if im interested in purchasing this property using a FHA loan which rquires me to live there for a while. Who gets the boot so that i could move in? Is it the current owners decision? Do i look at the units and decide which one i want? Do I have the 4 Tenants battle it out over some classic Rock Paper Scissors?

Im not as close to pulling a trigger yet but i am looking and learning. Hoping for mid-late 2015!! Thank you all in advanced for your help.

Im not sure if laws might be different in your respective state. Im in California fyi

Whoever's lease is up first, since that lease is binding on you.  Or if you cannot wait for the end of the leases, whoever you can buy off.

The important thing to realize is that the leases are binding, and your financing issues are your problem.

In addition to @Richard C.  's points, if you walk the property and/or have access to the present tenants' payment histories, I would factor in the following:

1) Which unit is most in need of repair {i.e. will be the hardest to re-rent}.  This should be your preference;

2) Which tenant has the worst payment history - is late, short, etc.; 

3) Which tenant has the most unkempt unit .... if your lucky, this aligns with 1) above.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Be a slump lord and force two of your tenants to share a bunk bed!  Just kidding...

@Richard C.  Okay so if someones lease is up I can just refuse to let them sign a new one? Or can offer money to have them leave a little sooner then thier lease. And when you say my financial issues are my own and that the leases are binding. You mean all becasue there is a new owner doesnt mean I can break whatever contracts are in place when I get there?

@Roy N.  Thanks for the input. So say the tenant that matches #1& #3 are the same. Would I start my relationship with the property by evicting a tenant once I take ownership? This does sound like the best way to get rid of a potentially problematic tenant. Maybe I need to look into the local laws on leaseing and agreements. So there isnt anything that forces a property to renew a lease as they have a good legal reason?

@Sam Leon I would never, lol. Crazy some places around the us arnt all that far off from this huh?

@Brandon Heath  

Do check your local tenancy laws - California is known to do things a little differently.

However, in many jurisdictions, when purchasing a property, you are permitted to request that the entire property, or a unit, be delivered to you vacant if you, or an immediate family member, plan to occupy it. 

If Cali allows for this, then you have the Vendor do the eviction as a condition of sale.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

The current lease agreements that are in place are binding legal contractors between landlord and tenants. If you were to purchase the property the landlord responsibility is then transferred to you- the new landlord.

You along with the tenants are responsible for honoring and abiding by all the terms of the lease. I would recommend looking over ALL leases prior to submitting offer. Last thing you want is to inherit a property where the tenant can call adverse possession on you- it will bankrupt you and the property!

Also, most residential leases have a Notice Period stated. You will need to give proper notice as described on the lease prior to the lease end date of the tenant by stating effective (lease end date) "your lease will not be renewed. You will be required to vacate your apartment no later than xxx time and xxx date.

@Marcus Curtis  

All true, with the exception of the situation I outlined above.  

There are jurisdictions whereby the Buyer has the right to require a property or a unit within a property be delivered empty if s/he, or an immediate family member, are to occupy it as their primary residence.  The Tenancy law in some of these jurisdictions only require a 30-day notice period under this provision, while others require the normal notice period based on the nature of the tenancy.

Medium greenapartmenthires 1024x1024Roy N., Louer Louer Ltd. | 1.506.471.4126

Adverse possession? Really? Don't you think that's stretching the limits of reality?

An aggressive tenant may be stubborn however i seriously doubt they'd be able to prove up either claim of right (or color of title) along with any of the five elements required.

There may be things to be concerned with when acquiring a property however an escrow with normal tenancy estoppel will avert most tenancy issues. AP ain't one of them.

Originally posted by @Roy N.:

@Marcus Curtis 

All true, with the exception of the situation I outlined above.  

There are jurisdictions whereby the Buyer has the right to require a property or a unit within a property be delivered empty if s/he, or an immediate family member, are to occupy it as their primary residence.  The Tenancy law in some of these jurisdictions only require a 30-day notice period under this provision, while others require the normal notice period based on the nature of the tenancy.

Great Information!