Decatur, GA · Member since 2015 · 49 posts · 6 votes
Hello,
I bought a house with the intention to flip. There are tenants living in it. The house wasn't properly maintained.
The seller did not furnish a contract which was already expired.
I intend to flip the house as quickly as possible since I have a hard money loan.
What is the best way to handle this deal?
Draw a month-to-month contract with a 30-day termination clause when I have a buyer?
How and when does the security deposit get handled?
Should I convince the seller to settle the security deposit now? (Especially before I start repairs).
How does that get handled?
I wouldn't want to get burned by a tenant that will not move because of a previous contract.
This is a Florida property.
Anything else I need to be concerned with?
Thanks!
Elda
Did you have a plan for this property before purchasing it?
You may need to check with a FL real estate attorney, but if the previous lease agreement is expired, you likely have a month to month lease with the tenants now. If that's the case, you should be able to terminate that "lease" with 30 days notice. Is it your intention to have the property vacant so you can do any repairs and upgrades?
Florida law states that 15 day notice is sufficient but I will give 30 days notice as a courtesy. My intention is to perform repairs while the tenant is still there then give them notice when I have a buyer. Is that the best course?
How will the previous owner assess whether the tenant should receive their deposit back if I will be doing repairs?
That's a good question. I'll give you what I think should be an overview of what has happened since you purchased the home with a tenant in place. I strongly recommend you consult with a Florida real estate attorney especially if there will be any resistance to the tenants wanting to eventually vacate with your notice or any disputes over the security deposit.
Any lease agreement (written or verbal) should likely have transferred from the previous owner to you with the sale of the house. You are now the new landlord. You likely should have received any security deposit in the sale transaction, whether as a buyer credit or otherwise. One way or another, this needs to be tracked and most states have some strict guidelines regarding the handling and return or security deposits. Check your purchase contract and settlement statement for any references to a security deposit. The contract may stipulate how this was to be handled and the settlement statement may actually show that the funds were transferred with the sale. If not, you should ask the seller ASAP. If they have any documentation as to what the amount of the security deposit was, you'll want to get a copy and be prepared to return this to the tenants.
With regard to the repairs, I would take pictures of the property now and keep them for your records. If your intention is to hold the tenants responsible for any damage they may do to the property, you'll want some evidence as to the condition now AND the improved condition as you perform your repairs. Again, be prepared to return the security deposit if you don't have strong proof as to why you wouldn't be doing so. As you may know, this needs to be in the form of a letter outlining the specific legal causes for withholding (there are certain things such as "normal wear and tear" that cannot result in withholding).
These things can vary from state to state, so again it is a good idea to consult a FL real estate attorney to be sure you stay on the right side of the law and have a good understanding of the process in the event that things between you and the tenants become adversarial.