Evicting non paying tenants by selling your house?

Question

Hey,

The new laws in NJ make it very difficult to evict tenants, especially with COVID. I was just wondering if it is possible to sell your property in order to evict your tenant if all else fails if they don't pay rent.

Any help is greatly appreciated. Thanks!

Vaughn Smith · Answer

@Nikita Ivanov in most instances when a home is sold the new buyer inherits the tenant and the terms of their tenancy, a sale doesn't void the terms of the tenancy unless that is specifically spelled out in the current lease (even if this clause exists its very hard to enforce). You may want to try a large cash for keys deal with the tenant where you provide them a few thousand dollars to vacate immediately.

Jonathan Herron · Answer

@Nikita Ivanov the general presumption at this time is that the eviction moratorium applies to all residential tenants.  While there are certain exceptions that can be sought through the Courts, I have not seen an eviction to facilitate a sale as one.

One important thing to keep in mind: the eviction moratorium is not a rent forgiveness program.  The money is still owed and the Courts are processing lawsuits for money.  They also are allowing eviction suits to be filed. If you have a real estate attorney you use, it might be worth having a chat with them about options.

Natalie Schanne · Answer

@Nikita Ivanov - I have a friend in this situation. It’s a difficult problem to have. In New Jersey, tenants have rights to continue at approx the same terms of their lease if they’re abiding by it. Obviously if they’re not paying rent, they would legitimately be evicted when the courts open and you can get your case on the docket. The law says they still owe you all rent they haven’t yet paid you, but it’s on you to get the judgement and try to collect.

My friend tried to sell the house for about six months while it was occupied by a non paying tenant with an above market rent amount. The tenant has 3 large dogs. I didn’t try to get a showing but I am assuming the tenant claimed covid and restricted or prevented all or most showings. The listing agent didn’t feature any inside photos of the home which were probably cluttered with tenant possessions. My friend only got lowball investor offers since anyone buying would have to assume the non paying tenant UNLESS my friend or the investor offered substantial cash for keys (and probably rent forgiveness) to have the person agree to move out (if the tenant would even agree to it). The highest paying buyers are home owner occupants because they get the cheapest loans (2.75% 30yr fixed atm vs 4%+ 25% down for investors). Home owners cannot get a loan if they cannot prove they’re going to move in.

So that’s where you’re at. If you prearrange to pay the tenant for leaving if you sell the house, maybe it’ll work. Otherwise, expect that you can’t show it and can’t get a good offer, thwarting your sale attempts. Good luck and let us know how it goes!

Rick Estacio · Answer

Check the terms of your lease.  It could say that tenant agrees to vacate upon a sale.  Otherwise, selling doesn't eliminate the tenants lease.  It just means the tenant stays and is now the new buyer's problem.

Steve Morris · Answer

In OR, but probably not.  A judge would say the tenant has a MtM lease even if he's not paying and you can't evict.

You can sell, but since the lease predates the sale, the buyer gets stuck with your "friend".