Ok folks, I bought a quad at foreclosure auction that currently has tenants in 3 of the 4 units. What do I do with the tenants? Does the change in ownership affect the lease signed with previous owner? Should I post and/or mail notification of new ownership (send your checks to me)? Do I evict at end of lease or if tenant can't produce a lease? Just spitballing here and am interested to hear what everyone has to say. Some facts:
- I am in South Carolina
- I have read the SC Landlord Tenant Act to no avail
- I have searched the forums, also to no avail
- My "mentor" has no experience in the situation
- Spoke with foreclosure attorney - said to evict them and told me which magistrate to go see
I look forward to your replies.
From what I know, I am pretty sure the lease goes with the property- not the owner. So based off of that, you would have to have a good cause to evict them.
Thanks Zac P. I think that you're probably right, and if they are paying tenants I'm in no hurry to get rid of them. Just need to make sure they're paying the right person - me.
You will have to honor their lease. Without a lease you'll need to give 90 days notice. Google the Foreclosure Tenant Protection Act for all the rules and possible exceptions (eg if the rent is below market value or they are family members of previous owner
In addition to that law, you'll have to check local or state ordinances
Thanks Huggy Baird. I will start reading right away.
I saw ur post earlier but didn't want to comment bc I don't know about foreclosure.
But I'm thinking u already got 3 out of 4 tenant. If they are paying u can hold off any renovations.
I bought a commercial retail with tenant. I spoke to them, they didn't want to move, practically begged me to buy it bc I'll keep 'em.
I asked for lease. It was landlord friendly ;) and they have been in business there 4 yrs. I just honored that lease. Retyped it, change names and date. Kept rent bc they signed for 2 more yrs ;). Bc commercial vacancy is more than yr. And the price was too good to pass.
Hopefully, I will inherit some decent tenants too! I just am not sure how to go about letting them know that I am the new owner. I hope to keep them if they will agree to the new leases. I would hate to incur a vacancy if it's not needed. Thanks for the insight.
You should find out if the tenant paid deposit or not. If so, you need to recover it from the previous owner, because you're supposed to return them (after all the repairs) back to the renters after they move out.
That would be ideal. I just assumed that since the property was a foreclosure that the original owner would not be interested in sharing with me - deposits, leases, tenant info, etc. I have their info from the property records, I guess it wouldn't hurt to contact them. Do you know if they are required to sign over deposits. Do I have recourse if they won't? Thanks for the idea!
What you can do really depends on the lease already in place. You should get hold of the lease. If one doesn't exist, you should sign new ones with the tenants. The standard CA lease says the agreement is with the owner who should keep the deposit. So technically if the tenant paid it, you're responsible for giving them back.
How did you work this out with the current tenants? Did you find the leases or did you have to write up new leases? If you wrote new ones, did you ask them how much rent they were paying (this seems risky)? I am debating buying a building like this at foreclosure tomorrow and am trying to get more insight.
Shaine, Congratulations! Now go forward as a " Proud " owner!
Everything you do with tenants has to be measured and fair to
all- Them and YOU.! The main problem you will encounter in
this type of scenario is that the tenants probably are used to
living without the usual structures in place. No tenancy agreements,
deferred maintenance that that will " boggle your mind " etc. and
as a result poor or non-existant collections
Several suggestions as starters -you have lots to do!
1. An official looking letter delivered to each tenant " Notice of
New Owner." Brief with Contact info and your intention to
meet with each promptly! Your letter should stress that No
payment of rent or business should be conducted except as directed
2.Meet each tenant seperately . Communication both ways:
Ask enough questions to get a picture of who each is,history,
expectations,flexibility! Of course a showing of paid rent and
any agreement. You may find that you have " squatters"- not
legal tenants, low rents-or real reasonable people glad to pay
more for better services. Make no promises or commitments
yet. Structure New Agreements to honor existing agreements,
Establish New " Floors" where no agreement exists,develope
your strategy for legal removal of undesirables
3. Once you have a feel for the property and the people
develope rules and procedures for the tenants to follow
from collections to disposal of trash! - Simple- one-or two
pages To order the business end up. You will have
determined who is a tenant candidate and who
is not by now.and what improvements you are able to
4. With " New Order" There will be Timely collection of Rent.
but usually collection problems from those you don't want.
There is usually very limited defenses in most states for
non-payment of rent.! You take it from here! " Add and Drop" !
There's more- but you get the gist "order-up" ! Get your operation
Keep in touch with your attorney and GET INSURANCE ASAP
Both Liability and Fire/Calamity!!!!!
Hope this helps- only one person's perspective. Best for
Sorry for the lack of updates! Here's the skinny: by the time I got the deed recorded and gained access to the property, there were no tenants left. Problem solved (well, one of them anyway). Building has been thoroughly rehabbed and is now available for rent. Sorry for the lack of info. I sincerely hope that this didn't inconvenience anyone. Thank you all for the encouragement and advice!
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!