I'm not a lawyer, so this isn't legal advice. For that, consult a lawyer. However . . .
One thing to do: Read your purchase agreement. Does it address the issue of the home being delivered vacant? If so, you may have some basis for action against the seller.
Next, obtain a copy of the lease. You say the tenants were told that they have 30 days (to move) after closing. That may or may not be correct. If the current owner is renting it to them on a month-to-month basis, that's true. But what if the owner signed a 1-year lease with the tenants? Then they may very well have the right to remain there for an entire year.
Beyond that, if the tenants paid a security deposit to the current owner, they will want the security deposit back--from YOU--when they move. That can be handled by having that security deposit transferred to you at closing. Otherwise, you could well be on the hook for that, too.
You may or may not be correct that the tenants are friends with the seller. It could be as simple as--as you suspect--the seller trying to gain some additional money in the interim. He may not care who pays him the $650 (plus the security deposit he has no intention of giving to you). But if he asked for the first month's rent in advance plus a security deposit, that's $1,300 or so more in his pocket.
I suspect your agent is appalled, but his/her motivation is largely the commission. At this point, your agent and the seller's agent just want the sale to close. Now, having said that, I'm not disputing your agent's ethics at all, and I'm sure he/she is doing what's possible to watch out for your interests. Still . . .
As for the seller's agent's assurances that they will vacate and the seller will repair anything damaged--listen to your gut. How would you even enforce that? You couldn't.
And I'm guessing you'll have a pretty significant negative cash flow until you get your "tenants" out of there. Who's going to make that up??
At this point, you definitely need to see a lawyer.
Having spent many hundreds of thousands of my own money on legal fees, I have a
paid for education of being a litigant.
I will share with you what my Attorney all ways asked me before beginning a suit.
"How much Justice can you afford????"
Now, if the people who now own the property had money, would they have a hardship that is required to complete a short sale????
Thus a judgement against them is not much more than something you can use a wall paper.
So if you sue them ( your cost $5,000 to $25,000) and when what do you get????
You get a judgment you can use to get them out of the home - should not take more than 60 to 90 days-
and you might be awarded damages - but your odds of collection is slim to NONE!
now of course there might be criminal charges however . . .
Mindy, welcome to the world of the short sale. This world has all sorts of land mines and you are finding just a few of them.
on closing day you need to know the house may not have any fixtures left - no sinks, not tubs, no dishwasher, no cabinets NOTHING, windows maybe broken out, doors removed, all walls torn down, holes shot in roof, septic filled with sand
Another rule of life: "if someone tells me not to worry, I become very afraid"
As I said in my first post, LAWYER, get a lawyer, cheaper now rather than later.
Personally, I cannot give legal advice as I am not a lawyer, but until the transaction is complete and title has transferred your only recourse is to wait it out and see what happens closer to closing. Do you have a closing date? If not, I would have the sellers sign an addendum stating that they will guarantee the property be vacant or pay all legal costs required to make it so.
Keep in mind, in many short sale situations, the sellers are still occupying the property themselves--what's to guarantee they move out and leave the property in the same condition? The answer is--the contract, and the law. If you have a valid agreemetn, trust that all parties will abide by it--your only real concern is that the tenants are fully aware of the situation--so make sure they are!
Agents are not attorneys and as such we can not give legal advise. You should speak with a real estate attorney. Let me ask you a couple of questions to give you a point of reference to start with if you seek legal advice:
1. Is your contract on the FAR or FAR BAR AS IS- both contracts state occupancy goes to the Buyer on the closing date. FAR BAR AS IS is more specific.
a. FAR Contract lines 50-55 #4 Closing Date;Occupancy: ________________________(the closing date you write in) at the time established by the closing agent, by which time the Seller will (a) have removed all personal items and trash from the Property and swept the Property clean and (b) deliver the deed, occupancy and possession along with keys, garage door openers and access codes to Buyer.
b. FAR BAR AS IS: line 76 Occupancy: Seller shall deliver occupancy of Property to Buyer at time of Closing unless otherwise stated here in.
If there is a chance the tennant will be in the property closing day and/or after you may want to speak with a real estate attorney about your options. You may want to discuss an amendment requiring the Seller to put into escrow, at closing, funds to cover your potential liabilities, including mortgage loss while you are unable to move in.
When rental property is sold, any current leases are supposed to be delivered to the Buyer for review prior to closing, rents prorated and credited to Buyer at closing and all security deposits given to the Buyer to put in Buyer's escrow account. Being a "Short Sale" the Seller's Lender may not allow this, since the Seller is not supposed to be receiving any cash from the transaction...this is why you need to speak to an real estate attorney. Ask your agent or thier Broker for some real estate attorney's names.
Broker Associate, GRI, SFR, CDM
Real Estate Consulting, Marketing & Sales
Prudential Tropical Realty
2539 Countryside Blvd #3 Clearwater, FL 33761