Home Buying in San Jose>Question Details

A.T., Home Buyer in San Jose, CA

What are the rights of a 1st time home buyer of a short sale home if the current tenants don't move out by the close date?

Asked by A.T., San Jose, CA Tue Nov 13, 2012

The current tenants are not the seller.

Help the community by answering this question:

Answers

7
A.T.

The short answer is you get to honor the terms of their rental agreement until it expires. Then you can ask them to move out or keep them as renters. It usually takes 90 or more days to get people evicted, which is thirty days more than you'll need. See next paragraph.

But as a first time home buyer with a mortgage that requires you to move in within 60 days, they have to be out before close of escrow for you to be sure you won't be in a situation that shows you to be breaking your mortgage contract with your lender. Such a breach, since it is foreseeable and you are signing a document that says you MUST occupy the house within 6o days of close, could get very expensive and even nasty with a visit from law enforcement and an unpleasant talk with a judge and unintended free room and board in an overcrowded building with people you would not choose for neighbors.

So the short advice, is DON'T CLOSE ESCROW UNTIL THE TENANTS ARE OUT IF YOU HAVE A LOAN TO BUY THE HOME AND LIVE IN IT.

Your agent should have told you this. If you don't have an agent, you can call me to discuss how I might help you for a fee.

Mitchell Pearce
408-639-0211
mitchell@handsonrealtor.com
2 votes Thank Flag Link Tue Nov 13, 2012
Dear A.T.:
In the CAR purchase agreement, there is a clause that can identify the date when tenants in a tenant-occupied property need to move out of the home. Talk with your agent about this clause, or specify what you want / need in an addendum to the purchase agreement. If you are already in contract, and this was not specified, you may still be able to specify this, if it is a condition of your loan. Make sure you understand the legal ramifications of having a tenant in the home, after you become the owner...and do this before you close escrow. There may be significant expenses associated with evicting the tenants, or "paying" penalties you may encounter with your lender.

I sure hope you received all this feedback, before you became owners! If not, talk to a real estate attorney, sooner rather than later!

Sally Blaze
Alain Pinel Realtors
925-998-1284
DRE 01856137
sblaze@apr.com
1 vote Thank Flag Link Wed Nov 14, 2012
You have the right as the new owner to collect rent. Make sure you notify the tenant of the new payment address and that you are now holding their security deposit (should be transferred to you when you close escrow).
Make sure you get a copy of the lease agreement as soon as possible, but this is important: IN CALIFORNIA A LEASE IS NOT REQUIRED AS PROOF OF TENANCY. In other words, even if the tenant doesn't have a lease, they have certain assumed rights based solely on the fact that they already live there. Police will usually not throw them out for trespassing, you'll have to go to court to get an eviction order.
If they have a lease you'll need to honor it. If they don't have a lease and refuse to move after being given proper notice, see an attorney.
1 vote Thank Flag Link Wed Nov 14, 2012
Do the tenants have a lease??? If so you may very well have to honor it. If they do not have a lease I would have your buyers agent speak with the listing agent about arranging for them to vacate prior to closing.
1 vote Thank Flag Link Wed Nov 14, 2012
Thank you for your question:

You have received excellent responses from Mitchell, Maria and Terri.

I recommend that:

1. You find out whether or not the tenants have a lease agreement. If the tenants have a lease agreement, you are obligated to honor the terms of that lease agreement.

2. You make certain that your purchase agreement requires that the property be vacant at least 5 days before close of escrow. Prior to the close escrow walk through the property to make absolutely certain that the property is vacant.

3. Refuse to close escrow if the property if the property is not vacant. Refuse to close escrow until the property is vacant.

As Mitchell pointed out, if you purchase that property with an owner occupied loan, and there are tenants in that property, you have violated the terms of your agreement with the lender and the lender has a number of remedies against you, even if the property is tenant occupied against your will.

One of the most common remedies that your lender has against you, is that if the property is tenant occupied and your loan requires that the property be owner occupied, your lender has the right to call the entire amount of the loan due and payable, and will call the entire amount of the loan due and payable, and foreclose on the property.

There are often criminal penalties as well if you get an owner occupied loan, and the property is tenant occupied, not owner occupied.

Unfortunately on a tenant occupied property in the State of California, you as the buyer have very few rights. The tenant is the one with the rights against you, and the lender will hold you responsible if you get an owner occupied loan and the tenants refuse to move out of the property.

Thank you,
Charles Butterfield MBA
Real Estate Broker/REALTOR
American Realty
Cell Phone: (408)509-6218
Fax: (408)269-3597
Email Address: charlesbutterfieldbkr@yahoo.com
DRE#00901872
.
.
1 vote Thank Flag Link Wed Nov 14, 2012
I can't agree more with Mitchelle. There are not guarantees they'll be out, they could leave the place a mess and you end up dealing with it.
Web Reference: http://www.terrivellios.com
1 vote Thank Flag Link Wed Nov 14, 2012
I would like to emphasize Mitchell Pearce's response. "DON'T CLOSE ESCROW UNTIL THE TENANTS ARE OUT IF YOU HAVE A LOAN TO BUY THE HOME AND LIVE IN IT."

Make sure it is stipulated on the contract.

Best.
1 vote Thank Flag Link Wed Nov 14, 2012
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer