Buying a Tenant-Occupied Property

[wookumus]

What is the name of your state (only U.S. law)? Oregon
We are in the process of buying a property with a very old manufactured home that is currently occupied by tenants in a month-month lease. Initially we planned to continue renting to the current tenants but we received our inspection report and the home has serious electrical/structural/mold issues. We are requesting that the escrow be delayed and that the current owner give the tenants 30day notice to vacate before we take possession but the owner does not have to agree to this. If he does not agree to our request and we decide to move forward with the purchase, our intent is to give the tenants 30 notice immediately and not offer any ongoing rental contract. Should we disclose the inspection report to them? Either way, what is our liability if the tenants decide to complain about the conditions of this home even if we have asked them to vacate? Could they pursue legal action against us for the condition of the property even if we do not offer a rental contract. We do not plan to ask for rent during this month and plan to refund their entire deposit. Any advice on how to best protect ourselves would be greatly appreciated. Thanks for your time!

 

[FarmerJ]

If the tenants end up not getting notice from current owner and you end up having to do it , I would say that even if they make a stink about the houses problems , your not the best target for them, ( the current LL is a way way better target now while they are still his tenants) because you can allways claim you have given them notice to vacate so you can have these things fixed with out the hassle of any one living there. I would say If you are not required to disclose to them the details of your inspections findings but you are free to use having to gut floor and walls that are in bad shape as the basis of them getting notice to move out. Its still better if you can get current LL to agree to give them notice via certified mail and to give you copy of both the notice and certified rct for your records.

 

[Mass_Shyster]

Personally, I would hold off closing until the property is empty. That is probably because, since I'm in Massachusetts, the tenant is always right, and the landlord is always wrong.

If tenant develops medical problems due to the mold, who will they sue? The former owner who has left town (and possibly the state or country or is otherwise not locatable) or the present owner, who's location is known. Also, since the suit may be based on the real estate, it could be an in rem action, meaning they would essentially be suing the real estate, and the owner has to pay the judgment.

 

[wookumus]

The current LL has refused to extend escrow and give notice to the current tenants, looks like we are setting ourselves up for disaster if we move forward. If the LL is unwilling to provide a reason as to why he refuses to change the escrow date, it would appear that he is trying to hide something? I guess we are going to have to cancel this transaction to protect ourselves. Perhaps we can start over but I am thinking this deal is dead.

 

[Searchertwin]

The current LL has refused to extend escrow and give notice to the current tenants, looks like we are setting ourselves up for disaster if we move forward. If the LL is unwilling to provide a reason as to why he refuses to change the escrow date, it would appear that he is trying to hide something? I guess we are going to have to cancel this transaction to protect ourselves. Perhaps we can start over but I am thinking this deal is dead.

If you can get out of this, than do it.
If you can get the renters out, than do it.

Why? The renters have been notified about the mold. Do you honestly think they will not get sick? They will find something wrong with themselves within days. Than you have the hassle of them being sick due to mold. My baby is coughing, can't breathe, I have been sick for days, my head hurts and only started when you took over and disturb the mold and the particles are flying in the air, blah blah blah.

The LL wants to get out of this and put this in your lap. You can't blame him, but that doesn't make it right.

 

[Stephen1]

Security deposit and Last month's rent.
If the tenant is still in possession of the property when you close then the security deposit and last month's rent (if it was pre-paid) become your responsibility so make sure you get those funds from the current owner at closing. If there is no written lease/rental agreement that spells out how much the deposit is or whether the last month's rent was pre-paid, then prior to closing you may want to get something in writing from the tenant as to how much the deposit was and whether they already paid the last month's rent so as to be able to compare it with what the current owner says. This also gives you something to go to court with should the tenant later dispute the security deposit amount and/or the last month's rent.

Also get from the current owner the signed move-in condition report for this tenant, if there is one.

 

[TigerD]

Flee from this deal.

You are buying a trailer, a beat up, trashed out trailer -- with tenants, who have a month-to-month lease.

On purchase, they are going to stop paying rent. Start complaining about the condition and file complaints with the controlling municipality.

When you file to evict, they will live there rent free for 3 to 6 months or more, while further trashing the place.

Run from this.

DC

 

[LdiJ]

Flee from this deal.

You are buying a trailer, a beat up, trashed out trailer -- with tenants, who have a month-to-month lease.

On purchase, they are going to stop paying rent. Start complaining about the condition and file complaints with the controlling municipality.

When you file to evict, they will live there rent free for 3 to 6 months or more, while further trashing the place.

Run from this.

DC

Unless of course the land that the trailor sits on is really, really, really worth it.

 

[TigerD]

Unless of course the land that the trailor sits on is really, really, really worth it.

That, of course, is a given; however, if the land was worth it, the OP wouldn't have planned to continue leasing the property or bothered asking these questions.

To me it looks like an inexperienced real estate investor is about to get his clock cleaned.

DC

 

[katiekate32]

run!

What is the name of your state (only U.S. law)? Oregon
We are in the process of buying a property with a very old manufactured home that is currently occupied by tenants in a month-month lease. Initially we planned to continue renting to the current tenants but we received our inspection report and the home has serious electrical/structural/mold issues. We are requesting that the escrow be delayed and that the current owner give the tenants 30day notice to vacate before we take possession but the owner does not have to agree to this. If he does not agree to our request and we decide to move forward with the purchase, our intent is to give the tenants 30 notice immediately and not offer any ongoing rental contract. Should we disclose the inspection report to them? Either way, what is our liability if the tenants decide to complain about the conditions of this home even if we have asked them to vacate? Could they pursue legal action against us for the condition of the property even if we do not offer a rental contract. We do not plan to ask for rent during this month and plan to refund their entire deposit. Any advice on how to best protect ourselves would be greatly appreciated. Thanks for your time!

I believe that you can get out of the agreement and get your money back. Frankly, this report on the condition of the place constitutes a "substantial change in the condition (and hence, value) of the property. If seller is unwilling to correct all these problems (starting with getting the tenant out so that proper repairs can be effected), then you need to get out and get your money back.

I would contact a lawyer and have him send a very pointed letter to seller...give them a dead line, and then pursue for both the lost escrow and your damages.