I'm about to go under contract to purchase a house that I found off a direct mail campaign. The current owner has a sub trustee deed in his name. His father originally sold the house on terms to someone about a decade ago. The father died and the son inherited the estate. The son discovered that the buyer had stopped paying the note as well as the taxes, and the son foreclosed on the property 18 months ago. A title company has verified that the guy I'm negotiating with is the current owner.
There are people living in the house. I asked the owner about them, and he said he has no idea who they are. They might be the people who originally bought the property from his dad, and they might not be. The guy says he knows absolutely nothing about them. Some quick Googling led me to believe that this wouldn't be much of a problem and that I would be able to get rid of them fairly quickly after purchase. Even if they were on a lease, it seems they would automatically be considered month-to-month after the sale and I could give them 30 days to vacate.
I met with my RE lawyer today regarding something else and mentioned this deal to him. He had a conniption and told me not to do the deal, claiming it would be a disaster and that it would be really hard to get the squatters out. I'm not sure what recourse they could possibly have, since even if they were the original buyers from the father they seem to have lost any possession rights when they were foreclosed upon. My lawyer couldn't really articulate a defense they might put forth, and would only say that it would be a mess in the courts. He admitted he generally only deals with "clean" RE transactions. Lawyer indicated I would not even be able to treat them as month-to-month and give them a 30 day notice.
Anybody have any experience with this sort of thing in Texas? My impression is that my lawyer is just being a Negative Nancy. For what it's worth, the property is in Hidalgo County.
Congrats on your positive find through your direct mail campaign!
As for your current situation, I would get a second and third opinion.
From my experience, Texas is a 0 tolerance state when it comes to tenants who do not pay their rent on time and you can actually initiate the eviction process as soon as 15 days from rent due date. However, these are not tenants (no lease agreement) so I wonder if they fall under the same rule and can be treated as such.
If I were you, I would contact 2 more attorneys and evaluate the popular opinion. A few dollars in attorney fees is better upfront than a lot of money on attorney fees after you close on the property.
Another option is that you mention the situation to the seller. Maybe you can come to an agreement in which both parties assume some responsibility on the matter. He can either extend your closing date and assist with legal fees to start "eviction" process or give you a discount on property assuming some of the legal fees to come.
I also wonder if you can simply approach the people there and ask them directly what the situation is since technically you're not YET the owner of the property? I would ask your attorney if this is a possibility, maybe they'll be nice enough to tell you what's going on so you can find the easiest way to fix the problem and get them out prior to closing.
Best of luck!
Hey @Jake F. I would definitely go to the door of the house and talk with the people. You should know the name of the people. Confront them by name and let them know that you are buying the property and ask them what the situation is with the house.
If they dont want to go, YES you can give them 30 day notice and get them out pretty quick. If it goes the eviction route, expect plenty of damage to the property. And base your purchase price on there being plenty of damage. Since they could not pay the mortgage, they probably are not fixing anything in the house either.
This one needs to be really cheap since you can not even get in the house.
ps Your attorney is being a wimp. There can and probably will be plenty of damage, but just base the purchase price as if there is plenty of damage.
Based only on what you wrote, there are some options.
- Make seller deal with squatter and it's not your problem. If you take the property with squatters, adjust your purchase price to account for less valuable property condition.
- Cash for keys - the money you would pay a lawyer and spend on holding costs, you give the occupants when they're gone.
- Evict as a hold-over tenant. You get the house in 8-12 weeks. If you can show that there is criminal activity, you can get eviction in 3 days.
- You possibly have to file a Trespass To Try Title suit to get clear title and possession. Unlikely if you get a title policy, but still there. You get the house in 6-12 months.
If there were other facts your RE lawyer knows, that will change what I would write.
I am assuming you are going worst case? Based on the OP, there does not seem to be an issue as to whom is in title. Seems to be a clean post foreclosure evict for possession. I have done a few of these and except for a quick education to the JP Judge, they have gone smoothly and taken no longer than a standard eviction
@Jake F. I would do some research to find out the name or names of the occupants
Great info everyone. I've already contacted a RE lawyer who deals with thornier issues than my current attorney.
I initially asked seller to deal with the squatters, or at least send a notice to vacate. Seller is very non-confrontational and doesn't want to deal with it. This is why he's willing to sell at a steep discount.
I think I've found the occupants' names, but you never know with open source Intel.
@Jake F. You might take a walk through the neighborhood and talk to a few neighbors to see if they know know what might be going on. They can give you a bead on the type of people they are and how they might be able to deal with.
I also find it hard to believe that the current owner went through the expense of researching, foreclosing, and paying everything up without knowing anything about who is in it. Seems fishy.