Seller's Tenant Refuses to Move Out - 4 Days Before Closing!

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Seller's Tenant Refuses to Move Out - 4 Days Before Closing!

Eléne Ray
Member since 2019 · 9 posts · 2 votes

Hi All,

Found myself in a crazy situation - would greatly appreciate any practical advice. 

I am buying a 2 family in Medway, MA. The closing is scheduled for Monday, November 14. The house, as specified in P&S, is to be delivered vacant.

On Sunday, November 6, I get an email from a seller's agent with a nonchalant "The first floor tenant secured her new housing, but can't move out because the deleading hasn't been completed, and would I be OK to close as scheduled but allow this tenant to stay until December 1?" I inform both my and the seller's agent that it is a " Categorical NO", and I am not closing until/unless the tenant is out, and the house is delivered vacant. 

No updates on Monday, November 7.

On Tuesday, November 8, my agent informs me that no, the issue now is not with deleading, but with the tenant's new housing availability or some such story. I tell her that I am not a full, I understand what the seller is doing - trying to push a holdover tenant (with little children - in MA! - with winter approaching!) on me and make it my problem.  Repeat that no closing is taking place until/unless the house is vacant, suggest the seller finds a temporary housing for the tenant + if I need to extend a closing, the seller himself pays for the lock rate holding and also compensate my own tenant who is supposed to move in on November 16. Explain that I mean business, and any breach of contract would result in serious consequences. 

Of course, with all my baring teeth, the situation is much more complex: I absolutely don't want to inherit this tenant with children and deal with an eviction situation in MA - yet, I need this house for all hosts of personal reasons, including taking care of a family member with advanced cancer. I am afraid of losing my lock rate + my own tenant doesn't have a place to go + my contractors have all been scheduled to start working + this house is meant as my personal residence, so I myself am supposed to move in within 2 months after the closing. What am I to do? 

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Nate Wiger
Investor · San Diego, CA · Member since 2022 · 24 posts · 20 votes
3y

If the tenant doesn’t move out, does the home still make sense for you? Sounds like it wouldn’t meet your needs of a second unit for your family member, since it would be occupied. You have a contract in writing. I wouldn’t budge. There are other duplexes out there. Contractors have to reschedule all the time.

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  • Nate Wiger
    Investor · San Diego, CA · Member since 2022 · 24 posts · 20 votes
    3y

    If the tenant doesn’t move out, does the home still make sense for you? Sounds like it wouldn’t meet your needs of a second unit for your family member, since it would be occupied. You have a contract in writing. I wouldn’t budge. There are other duplexes out there. Contractors have to reschedule all the time.

    1Reply
  • Eléne Ray
    OP
    Member since 2019 · 9 posts · 2 votes
    3y

    Thank you, Nate. 

    0Reply
  • Malkia Ra
    Rental Property Investor · Prince George's County, MD · Member since 2022 · 177 posts · 187 votes
    3y

    Stick to your guns on this.  It sucks, and it's a HUGE inconvenience; however most often when a home is being sold with an existing tenant the seller is attempting to cut their losses, and you don't want to inherit a problem.  So your assumption here makes sense (I like the way you think).

    Moreover, if the purchase contract indicates the home must be delivered vacant, the seller was well aware of what your terms are and thus the onus is on him/her to find temporary housing for their tenant.

    0Reply
  • Caroline Gerardo
    Lender · Washington DC · Member since 2015 · 2k+ posts · 2k+ votes
    3y

    Feels like tenant is a HUGE problem.

    Rates have not gone that crazy. Likely if you locked in early October it is the same. Do not pay for a rate extension fee unless the seller wants to write the check to the lender directly. 

    This will go on a while. Try to make it fast and not so painful. Ask seller to pay your rate extension fee and spell out the costs in increments of seven days. If seller likes the tenant so much they can pay for your extensions as long as it takes for tenant to be 100% out. Seller probably will not agree to this. What does your agent say you can do to make them perform?

    Maybe this is not the deal for you. Probably something better is out there. Ask for some money and move on if seller refuses to pay your extension costs now in the form of a check to your lender. 

    Ask for $5000 or 10000 depending on sale price for not performing. Seller knew about this when they signed the contract.  Your hard costs: appraisal, inspections, hardship...

    Get 100% of your EMD back. Did you sign for arbitration? Seller agent contacted you directly? Hinky...

    1Reply
  • Eléne Ray
    OP
    Member since 2019 · 9 posts · 2 votes
    3y

    Malkia and Caroline, thank you so much.

    0Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    3y

    Definitely be ready to walk or accept the existing tenant. There is ZERO chance they will be out in 5 days, 3 business days. So then it comes down to do you still want it. Obviously if you were the seller you wouldn’t pay $1 towards the buyer’s costs unless you were SUPER desperate, since they could still walk or fail to perform and the sky’s the limit. So the seller should show up at the closing on Wednesday ready to close. 

    It will probably come down to who’s more desperate. Make sure you go to the closing so they don’t say you failed. But expect the tenant is still there and you bail or pay anyway. If it’s a primary loan and not an investment loan. Either you move in first (DEFINITELY within 60 days.) or you move in with your sick relative on their side of the unit. DO NOT get an owner occupied mortgage and fail to move in within 60 days. That’s not going to end well. 

    Good luck and let us know what happens. 

    0Reply
  • Eléne Ray
    OP
    Member since 2019 · 9 posts · 2 votes
    3y

    Hi All,

    Here is an update: we extended the closing until December 9 with the seller paying for the rate lock extension.

    0Reply
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