I'm not a landlord currently but i'm in negotiations to buy a house that was rented out with no lease or contract and they haven't paid rent in 4 months. I'm potentially getting this house at a huge discount but I need to know what my legal issues may be getting these people out before I move forward?
Dont buy it with those tenants. You could spend thousands getting them out and you will lose thousands in rent on top of that. Make the sale contingent on them vacating. Dont even let them get current. Once they are they will do the same thing to you.
I could add that as a contingency. Maybe I could do a cash for keys and get them out that way before closing?
Have the current owner offer them cash for keys. This keeps you out of the deal. They already have a relationship with the owner (though it may not be a good one). As others posted, I would not close with them in the property.
Not sure how evictions work in California, but I am picturing the state being pretty tenant or even squatter friendly. Can you talk to the local county judge that would potentially handle the eviction to see what to expect? If not the judge, then certainly a local RE attorney.
Also, is there adequate documentation on the part of the seller regarding the non-payment of rent, or could this be a he-said she-said type situation? If no contracts, was there any sort of security deposit in place to consider?
Cash for keys has worked every time for me. $500 cash move out in 7 days. Present it to them in a clean simple letter, font size 16.
I used to have to do these for the bank back in the reo days. Your on the right track with a cash for keys, otherwise your more than likely going to be looking at a sheriffs eviction. Im not sure what the time frame on this is anymore, but they used to be 4-6 months.
The real issue is if they are going to trash the house before you take possession. I have seen people pull all the copper from the home and pour cement down all the drains because they were pissed off.
@John Thedford @Jake Rees @Frank Romine great info guys. The situation is that this owner can't afford the house anymore, renters are not paying, and it needs some rehab but from what I've seen via pictures it's not in horrible shape. the owner can't afford any of this. I'll be seeing the property in person in 1-2 days. I could fund the "cash for keys" through the current owner once I have a contract in place with a contingency that the contract is void if the squatters are not out by closing. In the mean time I can research the local eviction laws, maybe talk to a property management company and act like I'm searching for some managers and get eviction info from them?
The easiest route is cash. Cash cures many problems. It is far cheaper than an attorney, cheaper and faster than the courts, and has the ability to make your problems (poor tenants) go away smiling. If it cost you $500-$1000 that would probably be less expensive than any of the other alternatives.
The process in Md. is to do 2 things.
1. Failure to pay rent judgement if no rent is paid followed by warrant of restitution followed by eviction.
2. More importantly, no lease equals assumed month to month lease. Certified letter calling in lease with 60? Days to vacate. Upon not leaving, tenant holding over filing. Followed by warrant if restitution followed by eviction.
3. Try cash for keys, but no guarantees
I personally see great opportunity in purchasing with the tenants in place. Because obviously the squatters and their lack of payment is causing the great motivation for the seller which your trying to capitalize on.
Best to get it even lower once u see the property saying that it's not what the pictures showed and it may be even more costly than you expected to fix up and get them out.
Once closed start your eviction immediately!! make sure you have insurance on the place. Our last purchased we closed started eviction and tenant faked falling down the steps. we didn't get the insurance company in prior to closing.
But now is the time to educate yourself on the eviction laws in your county. Even go sit in court tomorrow ( i did this on monday, great education watching other ppls problems first hand. And seeing the attorneys who kick ***) Get yourself familiar with everything and go take that property down. Don't be scared, fortunes are made in solving other peoples problem. Just my two cents. I hope this helps... Oh yeah, if you can't afford to wait for the eviction financially you may want to not take this project on. But if so, it may be beneficial to you.
Thanks again, I'll try to remember to report back to this thread if I'm able to handle this situation and what did or didn't work.
@Lee S. is the property in CA?
As mentioned, if there is no written contract in place, then they're month-to-month. You just give them a 3 day notice to pay or quit, then when they don't proceed from there.
Check to see if the house is in rent controlled housing, which is just a bit of a pain, but you can still evict for nonpayment of rent.
Here's the CA courts self-help eviction info:
Personally, I'd start the eviction process before offering any cash for keys. They might be more amenable after getting served :-) You can probably just do it all yourself without an attorney.
If the property is in SoCal, the process is as follows:
Serve a 3-day notice, and assuming they do not pay, you file an unlawful detainer.
If the tenant does not file a response to your unlawful detainer, it becomes "uncontested" and it is only matter of time for the tenants to be evicted. Typically 3 - 4 months in length.
If the tenant does answer the complaint, it becomes "contested," which will require you to proceed with an in court hearing. Typically 4 - 5 months in length.
If you are dealing with a savvy tenant who files an ex parte, bankruptcy, or begins to maneuver the system, it can take years for the eviction.
Ask for a possible E stopple, which you probably will not get, but an attempt beyond that may just delay closing the escrow, and even jeopardize your deal.
I have purchased with no paying tenants, and just factored that in the price. Of course, I never assumed a lengthy process, but that's just the risk you take of doing real estate business!
I'll be referring back to this thread as I go through this process. I definitely plan to use the tenants to get the price I want, I'm pretty confident I've already got it down to 50% ARV but I'll know tomorrow.
If you do offer cash for keys, make sure it's documented in the offer that the units must be handed over "broom clean". Or at least with no damage and no junk that you're responsible for storing.
As a proeprty owner in CA The procedure it not hard and is described well by @David G. The only thing I can add if you are an LLC or corp you would need an attorney to file This adds about $500 to the process and figure about $1200 out the door if you can do cash for keys it can be cheaper but please research the procedure and make sure the tenants are completely out of the dwelling before any money is given Good Luck
@Lee S. so while the process can and usually is pretty straight forward be aware that straight forward is not always the case. There are a number of threads here where it has cost people tens of thousands of dollars and many months of time to get tenants out. It can really be a problem, especially in CA if the tenants want to make it a problem. This was covered in one of the earlier pod casts as well. Do some research here if you really plan on doing this deal. At least being aware of your risks helps you plan better for the worst case.
Thanks will do.
Good luck! let us know how it goes, if you need any additional help or assitance, check out this link on eviction forms, process, serving, all that good stuff..
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