Home Buying in 94015>Question Details

Alex, Home Buyer in sf bay area

closing escrow on a short sale in a few days. want to know legal rights if owner has not vacated property at the close of escrow

Asked by Alex, sf bay area Wed Jan 11, 2012

what are my legal rights to get the sellers out of the property right at the close of escrow?
in the purchase agreement, it states the property will be delivered vacant and within 5 days of closei will be entitled to my final walk through, which i hope will be when the property is vacant. the owners have been slow at leaving the property and the latest update is they will be out this weekend which is 3 days before the close of escrow. all indication from the purchase agreement is that the owners do not intend of staying at the property beyond close of escrow. also disclosures in the section that describes tenants and multiunits it was left blank, which suggests there are no tenants and in reality there are none.
if lets assume sellers are still there on close, do i have the legal right to move them out or do i still need to go through an eviction process even given what has been stated in the purchase agreement and disclosures? im thinking worst case now.

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8
Carl Medford’s answer
Alex:

According to page 3 of 8 in the RPA-CA, Section 5. B., unless stated elsewhere in the contract, the current owners are allowed to inhabit the property up until the actual time of delivery stated in the contract. In other words, if the contract states that delivery is to occur at 2:00 p.m. on the day of Close of Escrow, then they are allowed to inhabit the property until 1:59 p.m. and 59 seconds.

They do not have to have moved out for you to do your walk-through, which can happen any time beginning 5 days prior to Close of Escrow. In reality, in owner occupied homes, the seller is usually still living in the home at the time of the walk-through.

You will not know of any move-out damages, etc. until after the owners are gone, and, in cases like this, they often move out AFTER your loan has funded. Therefore, it is usually NOT in your best interest to delay the close of escrow because you will be paying interest on a loan that has funded but will not have legal possession of the home.

As stated below, if the seller continues to occupy the home AFTER close of escrow, then your only legal recourse is to evict. If there are damages or missing items, then contact the listing agent to resolve the issues. If they cannot get things resolved in an easy manner, then Small Claims Court is typically your only recourse.

You cannot expect the listing agent or buyer’s agent to “make good” on property damage or missing items – the contract is between you and the seller and your only recourse is legal action against the seller.

To be frank, this is the “dark side” to short sales and short sale sellers have been known to leave the home very dirty, with dents in walls from careless moving practices and items missing (such as the range or anything else written into the contract, such as the fridge). Since they are losing their home, they often don’t care. In addition, you might get a judgment, but it could turn out to be impossible to collect.

Hopefully your agent explained all this to you prior to your writing the offer.
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1 vote Thank Flag Link Thu Jan 12, 2012
Worst case would be eviction. But stay calm. Some people stay to the last minute
0 votes Thank Flag Link Wed Mar 6, 2013
update: basically found out that regardless of the lack of disclosures and seller not meeting the terms of the purchase agreement by deliverying the property occupied, legally the occupants become tenants once you legally own the property. it is then up to the owner to make rental or moving arrangements w/ the occupants. in the event the occupants/tenants decide to not vacate or are uncooperative, you then have to go through proper eviction procedures to get the tenant out, which could take months to finish.

at close of escrow, i was left with a couple options:
1. breaking the contract due to non performance of the seller for not delivering the property as stated per purchase agreement and disclosures. i would then have to issue a cancellation request which would need to be approved by all parties. return of deposit could be hung up if somehow the seller disagrees w/ the cancellation and at that point only action to retrieve the deposit is to go through the legal process.
2. close on the property and make arrangements to allow the tenants to move out. have a lease agreement for the time they tenants occupy the property. the risk in this situation is dealing w/ uncooperative tenants.

in the end, weighing the pros and cons, i ended up going w/ option 2 and worked out a short term lease agreement/rent back w/ the occupants. within 1week of closing the occupants vacated the property and in the end i got a kick *ss deal on my house.
0 votes Thank Flag Link Wed Feb 1, 2012
Alex,

Short sales can be tough in many ways. But for the most part the short sale homeowner has made an agreement with the bank and feel they must be out in order to make this agreed upon short sale work. They have had ample notification and usually make arrangements to be out by the closing date. As you said, worst case scenario would be to have them remain there and have to do an eviction procedure. Your contract also should state that the homeowner will owe you so much per day if they are not out by the specified date in the contract. If this is a 'cash for keys' short sale, the seller will have to be out by that date or the funds they are to receive will be diminished or withheld. This is another motivator for them to be out. Ask you agent to find out if this is the case.

Robert McGuire ASR
Realtor/Consultant
Your Castle Real Estate
1776 S. Jackson St. #412
Denver CO 80210
Direct – 303-669-1246
0 votes Thank Flag Link Thu Jan 19, 2012
Hi Alex,
After the purchase, if the previous owners refuse to move out, you would need to go through the eviction process. I agree with the previous advise of delaying the closing until they are out and you have your walk through. I realize that the short sale approval is only good through a certain date but that would be easier to solve than eviction.
Good luck,
0 votes Thank Flag Link Wed Jan 11, 2012
Alex, if you are looking at the worse case scenario , then you should start looking for real estate attorney's who specailize in evictions.

Every transaction is different, the sellers may be getting some money from the lender to get out. Have your agent start probing if he/she hasn't already.

If you need a referral to an attorney, feel free to ask.

Best.
Tap
0 votes Thank Flag Link Wed Jan 11, 2012
Alex,

If I were buying this property I would sign the papers but not deliver closing funds till I was able to verify the house was vacant.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
0 votes Thank Flag Link Wed Jan 11, 2012
It's in your best interest that the property be vacated by closing day; for any legal rights you may have, it's best to consult with an attorney who specializes in real estate.
0 votes Thank Flag Link Wed Jan 11, 2012
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