Does anyone know Tennessee Laws? Closing on our First Duplex!

Question

We are using FHA to house hack. We found a duplex near Oak Ridge TN and of course could not get the seller to tell tenants to leave! Figured we'll do it ourselves, one is month to month, the other's lease ends in May/June '21. We did not realize this should have been contingent on our offer, neither did our last minute agent...

So, to now. We're supposed to close March 31st! We are inheriting two tenants and need one too go asap for our FHA loan, they are month to month. Keep in mind we are coming from several states away. Our fha appraisal was pushed out as both tenants claimed to have covid.

My game plan-

Send 30 day notice via certified mail on day of/day after we close.

State additional 125% rent increase for any days past the day they are supposed to be out. Or what ever is legal, purhaps interest.

Call/email them 1 week in, to check on progress.

Schedule a final walk through for deposit refund asap after the 30 days.

Can I take deposits if there is no move in/out inspection given? There are holes in the walls and off door knobs etc etc... I doubt it was rented to them like that. If they don't have pictures, can I just take it out of their deposit and be safe? Their lease was a one page joke too.

My questions about them not leaving...

I believe the eviction courts are open in TN, are they?

Is the whole CDC moratoruim applicable to Tennessee?

Does it help that we are evicting to live there, in one unit? What software should I use? Should I have boots on the ground and get the notice to vacate posted on their door, and who?

Adrienne Green · Answer

Hi @Jillia Virtue!  There can be challenges like this when buying a property with tenants in place. This website has a pretty good explanation of the process you'll follow: https://ipropertymanagement.co...

I like your plan of the certified mail notice for 30 day notice to quit, I don't think you need to have someone hand deliver it.  I would also call/email it to them.

You may see if your real estate agent is interested in helping them as tenants find a rental, or can refer them to a property management company who may be able to help.

I would be doubtful you could withhold any security deposit if you don't have evidence that the unit was in better condition when they moved in.  That's my opinion based on my experience.

You may want to consider getting a PM for the other side of the duplex, and if you do, that PM would likely give you advice on this scenario.

Reese Hamilton · Answer

I'm not a lawyer but as a PM in Chattanooga navigating these types of challenges with the help of legal council is relatively common. Here is what I have learned:

The courts are open in Hamilton County TN and eviction hearings are starting to happen again. The courts are backed-up currently so I suggest doing what you can to stay out of the courts since the cost of eviction will likely surpass the cost of giving them 30-day notice via certified mail and using @Nathan G.'s strategy of offering an incentive to leave at the end of the 30 day period.

The CDC moratorium applies to TN but is not an absolute halt on evictions. The moratorium requires the tenants to fill-out a Declaration form provided by the CDC and some judges have made tenants prove statements in the form are true before allowing protection under the moratorium.

We use "boots on the ground" and physically post evictions, email, and text so it's easy to prove notice has been given. Certified mail should do the trick but at least one other medium of communication would be a good idea.

Best of Luck!

Nathan Gesner · Answer

@Jillia Virtue I think you're headed in the right direction.

If the tenants fail to leave, they are considered a "holdover tenant" and you can charge a penalty or fee for that. I charge 4x the daily prorated rent. If rent is $1,000 a month, 30 days in a month, that comes to $33.33 per day. Multiply that times four and a holdover tenant will be charged $133.32 per day which can be deducted from their deposit after they vacate.

As for the damages, you could withhold for that but you need to defend your position it ends up in court. If they had a one-page lease and are renting well below market, there's a good chance the property was in bad shape when they moved in. Personally, I would focus on getting them out instead of collecting a little more money. You may want to state in your certified letter that you will not require them to clean and that you'll give them a full refund of their deposit if they are out by the scheduled date and there's no addition damages. I would also offer to issue that refund immediately if they are out on schedule. Perhaps your agent is willing to collect the keys, do a quick walk-through, and hand them the check for a fee?

The eviction moratorium applies to payment of rent. If the tenants are given proper notice and they refuse to leave, you could still evict (technically). The problem is that many courts are gun-shy about any evictions and the courts may be overwhelmed once the moratorium is lifted. The good news? Your tenants can't claim COVID because they've already used that excuse!

Suggestion: buy "Every Landlord's Legal Guide" by NOLO. Great resource full of practical advice and it has your state-specific laws, updated every year. They also have a great website with additional information that is regularly updated.

Does anyone know Tennessee Laws? Closing on our First Duplex!

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