Suspected forged lease by tenants

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Suspected forged lease by tenants

Sam Simon
Member since 2018 · 3 posts · 0 votes

Just wanted to see if anyone had additional input or ideas for this seemingly unique situation:

I recently closed on a single family tenant occupied home with long term tenants.  It is not governed by rent control.   The prior owner passed away in his nineties and all properties went to his estate.  Tenants "apparently" had keys to his unit and no documents were found on any of his Los Angeles properties. 

The tenants provided a 5 year lease with absurdly low rent, signed 7 months prior to his death from a long bout of cancer (with live in care).  It's a scan of a scan and has the relative inconsistencies of a cut and paste.  I purchased the property at a discount due to the 3.5+ years left on the lease and considered waiting things out but the story just doesn't line up... 

Why would a savvy RE investor in his final days write a 5 year lease for one property that reduces rental income and/or the ability to sell for his sole heir?   I was informed that trust documents allowed for the tenants' first right of refusal on purchasing the property at current appraised value...they offered 200k below.  They subsequently turned down a $50k offer to vacate.  They interfered with showings, photos and marketing of the property.  My guess is they assumed they were guaranteeing themselves a steal of a purchase...  

I've consulted an attorney and I'm also reaching out to a forensic document specialist...any other thoughts based on landlord experience?  My first rent check will arrive this week and my plan was to return as to not ratify the lease.  

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Stanley Bronstein
Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
7y

@Sam Simon You say you purchased the property at a discount because of the lease. That implies you knew about the lease before you purchased. Now you want to say the lease is a forgery so that you can evict the tenants and get a new tenant with increased rent.

First of all, talk to a lawyer.

Without knowing more details, I suspect you're going to have a tough time proving the lease is a forgery.

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  • Stanley Bronstein
    Attorney, CPA, Broker & Author · Scottsdale, AZ · Member since 2018 · 532 posts · 488 votes
    7y

    @Sam Simon You say you purchased the property at a discount because of the lease. That implies you knew about the lease before you purchased. Now you want to say the lease is a forgery so that you can evict the tenants and get a new tenant with increased rent.

    First of all, talk to a lawyer.

    Without knowing more details, I suspect you're going to have a tough time proving the lease is a forgery.

    1Reply
  • Sam Simon
    OP
    Member since 2018 · 3 posts · 0 votes
    7y

    @Stanley Bronstein  I appreciate the reply.  I'm working with an attorney at this point.  I was implying lower value versus the original list price as sellers were having a bear of time showing, presenting and working with tenants.  Seller is a very elderly woman who lives far and the estate has multiple properties to liquidate in limited time.

    I will owner occupy this house - it's single family.

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  • Andrew B.
    Rockaway, NJ · Member since 2016 · 2k+ posts · 2k+ votes
    7y
    Originally posted by @Sam Simon:

    @Stanley Bronstein  I appreciate the reply.  I'm working with an attorney at this point.  I was implying lower value versus the original list price as sellers were having a bear of time showing, presenting and working with tenants.  Seller is a very elderly woman who lives far and the estate has multiple properties to liquidate in limited time.

    I will owner occupy this house - it's single family.

     Some locales allow you to evict a tenant when the purpose is to owner occupy (you may have to pay out moving expenses). This is the route I would pursue first. if you try to kick them out based only on the idea that the lease is forged, you are likely to be going into a very long, expensive legal battle.

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  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    7y

    Definatly pursue owner occupy eviction as first line of attack.

    Since you do not have any idea of the tenants actual rent you will need to contact the seller and have her check the bank deposits to determine what their actual rent payment was. You may need to have your lawyer contact her lawyer to find out. You need that information to proceed with a challenge to the lease. Assuming they made rent payments within th elast 7 months you can show they falsified the lease and you may have grounds to evict.

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  • Account Closed
    Lender · Dallas, TX · Member since 2018 · 110 posts · 32 votes
    7y

    Doesn't help you on this case, but next time you buy an income property with existing tenant, require an estoppel prior to closing, signed by tenant, stating what they believe the term, rent, security deposit, etc. to be.  If it differs from the information from seller, you have a chance to address before you are on the hook.

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  • Lynnette E.
    Rental Property Investor · TN · Member since 2018 · 2k+ posts · 2k+ votes
    7y

    You do need to ask the seller to see the historic rent amount for the past 2 years.  That will show what was paid for rent when the man was alive, and you can see if they decreased the rent amount after he passed away.  Then you have proof that they were messing with the rent amount.

    If they were long term tenants they likely were under market rent but also month to month, without a lease.

    What does the lease say about breaking the lease?  Maybe you have an out there.  

    Or maybe you have some major safety repairs that will result in you having to find the house unsuitable to live in with the repairs.  Have the most detailed aggressive 'deal breaker' inspector do a complete inspection of the home.  It the popcorn ceiling peeling at the corner, might it be full of asbestos?

    And try to owner occupant pathway too.

    And also check the date the lease was signed,  See if you can 1.  find out who the seller paid to be the aid that day, do they remember a lease being signed?  2.  See if the man was in the hospital or had medical things that would have occupied his time that day.  Was there a calendar? 3.  If he was on chemo or pain killers he may not have been competent to sign anything.  His checking account may show checks like copays for that day.  Medical insurance would show claims too, good for dates and pain killer, chemo meds.  But for this you do need a seller who is willing to go this pathway.  Since they did not to sell the place, they likely will not want to now.  BUT maybe the attorney will.

    Also, if he had other rentals, did he do this extended low market rate for any other rentals?  If not, were they also long term? Did anyone have multi year leases?  This information may help you.

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  • Sam Simon
    OP
    Member since 2018 · 3 posts · 0 votes
    7y

    Thanks all, I appreciate the perspective.  There are additional specifics to the county regulations, lack of rent control and an edited generic lease but none provide any guidance on owner occupying.  That being said, all of this input is very useful.  In fact, it's in line with the approach suggested by my attorney.

    I'm in the process of collecting all available information in hopes of finding the path of least resistance. 

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