Posted by JC in Seattle on April 20, 2003 at 12:34:12:
Tim, Thanks for the detailed reply. Since we are still negotiating the P&S, I will find out what the terms of the current lease are, if the tenant is abiding by the terms of the lease, i.e. not evictable, what the tenant is paying, etc. This should give me a better idea if this will work as a flip.
Since this would be my first deal, and this is an MLS deal (read earnest money), I will probably walk if the situation with the tenant isn’t really sweet.
-Thanks!
JC
Wholesale flip w/tenants - Posted by JC in Seattle
Posted by JC in Seattle on April 18, 2003 at 22:53:34:
Hi All,
Currently negotiating a contract on a junker with tenants. How can I ask seller to evict the current tenants? Do I just add an addendum stating that seller will evict current tenants prior to closing date?
If there is an active lease between the seller and the tenants, the lease must be honored, even if you buy the property. The lease will survive the sale. When the lease expires the tenants can then be told there will be no renewal. You can’t evict simply because of a sale.
You used the word “eviction”. This implies the tenants are in breach of the lease agreement. If this is the case, then yes, you can stipulate in the contract that the seller must evict and the property must be vacant on the day of closing.
Posted by JC in Seattle on April 19, 2003 at 14:42:30:
Boy, that’s helpful to know. So, if the current tenant has a lease for, say, 6 more months, I probably wouldn’t be able to flip this to a retailer/rehabber. Right?
Also, on the Form 17 disclosure, the seller failed to check yes or no for the questions, Is the property subject to options, lease, life estate. They should check one of the two, right? Does ‘options’ refer to a lease option? What is a life estate?
I’ll run all this by my attourney and continue searching the site, but any info is appreciated.
THanks! -JC
Joe is correct that the lease will stay with the property and the new owner has to abide by it’s terms. Further, if you want a property with no tenants, you can ask for this in the contract. Whether or not it will happen is up to the seller and the terms of the lease with the tenants. I am helping a seller right now where the buyer has asked the tenants be gone before they take possession. The seller can wait the lease out, or evict with cause. In this case, the seller can evict the tenants as a notice was already given to vacate so evicting the tenant is not a problem. Not every case has a way to evict timely; this one just happened to have a bad tenant in place already. Without cause, the tenant will probably be allowed to stay for the 6 months or whatever term is still left on their lease.
Flipping a property with a tenant is still doable, but you need the right property and right buyer to sell to. I would gladly buy a property with tenants if the deal was acceptable as maybe my options for that property is to keep it for the cash flow. A rehabber may want an empty place so that work can be performed without headaches, but then if you have a tenant; it shouldn’t need major rehab since it is obviously livable in it’s current state. So it is possilble, but harder to find the right person to sell to with conditions.
The form 17 disclosure is a required document on ‘most’ transactions. As a buyer, you would like to see as many of these items checks as possible, it is not a requirement that all things be checked with a possible answer. Remember something about this form though, it is a requirement that a seller give it to a buyer within 5 days of an acceptance of a P&S mutually signed by both parties; and then the buyer has 3 days to determine if they wish to back out or not. If you are not happy with an answer, you can walk if you want to. It is important to note that this document is for disclosure only, and not meant to be part of the P&S regarding terms of the deal.