I Need some Home Ownership/Real Estate Advice

Cmike2780

Hey friends. My fiancé and I are about to buy our first home and I need some advice. We're currently under contract, but facing a few problems.

Quick Summary:
-The house we're purchasing is a single family, however the current owner has a tenant living in part of the house (own entrance, kitchen etc...).

-We intend to remove the 2nd kitchen & tenant entrance when we move in and bring it back to it's original configuration. Just minor work really.

-It doesn't have a legal rental permit, so basically the space is an illegal rental.

-The bank won't approve our loan if it's a 2-family residence. They'll remove the stove for the appraisal.

-Our mortgage rate lock is good until 4/28/14, so we were hoping to close by then.

-We find out after the offer, but before contract that the tenant supposedly signed a rental agreement until October 1, 2014. Our realtor told us he would agree move out by May 1st, May 15th the latest however, so we signed thinking they could close around May 1st.

-Contract states we can close "on or around May 1st"

-We expect the home to be vacant when we move in.

-Found out today that the tenant can't move out until the end of May.


The problem basically comes down to this. We don't want a tenant there when we move in. At first, our realtor told us the tenant could leave any time....that there was no rental agreement since it wasn't a legal rental. So we said okay and made our offer. We agreed on a price, locked in our rate and I set out to have a home inspection done. Then our realtor tells us the tenant can't move out until May 1st...May 15th the latest. We said okay, sign the contract which states we will close "on or around May 1st." Maybe we're naïve, but now we're finding out that "on or around May 1st" means it could be as late as June 1st?! Now they tell us that the tenant can't move out until the end of May. WTF! (I f*cking hate our realtor right about now! She's lied or misinformed us several times now, but we have no choice but to stay with her....her husband is the owner's agent). Which means we either keep the tenant (living in our illegal apartment) or we eat the cost to extend our mortgage rate lock and possibly jeopardize our loan. If for some reason the whole thing falls through, it also makes our loan officer look bad. Something we don't want since he's helped our family in the past and have a good relationship with. We took it on good faith that what our realtor was saying was the whole truth, big mistake. Now she's trying to put it all on us.

I guess my question is, what would you guys do? We really love this house and the appraisal already has us $20k ahead in equity. We already put down $10k for the down payment along with inspection fees, attorney fees etc....

If we purchase the property, do we have to honor the rental agreement? Is the rental agreement binding? ...even though it's a an illegal rental space?

Should we just close, let the tenant stay and collect rent? The reason he can't leave is because he's a professor at a local university and can't move until classes end. We want the house to ourselves though and don't need the rent or the liability of an illegal rental.

Any advice would be greatly appreciated. Thanks in advance.

__________________

[09][MB][6-Spd MT][Touring][Stillen Gen III][K&N][Borla CBE][Evo-R]

MacCool

Potentially complicated problem. I hope you're seeking advice from sources other than a sports car forum. Like maybe a lawyer....

Personally, I'd let the Professor stick around. Path of least resistance. Especially since you don't seem to have a commitment in writing.

JARblue

Other than consulting a lawyer (which is what I recommend), it seems you have two options.

First would be close on the house with the tenant and let them stay. Seems easy enough, but I can definitely understand not wanting them there. Bonus rent income for a month is always nice.

Second would be to screw over the tenant. Buy the house and then evict them. There's no rental agreement, so you can just say that you were unaware of the arrangement. Unfortunately, it doesn't seem there's a good way to screw over the people who deserve it (owner and/or realtor - whoever has been lying to you).

__________________

JARblue

I am also wondering how much the mortgage rates are changing on you. Rather than extend you might have an opportunity to get them lower.

We actually purchased our house mid-March when our apartment lease wasn't up until June 1st. The seller was having trouble closing on his new place, and we let him stay for over a month in exchange for a bunch of furniture and yard equipment he was willing to leave us. It worked out great as we didn't have to pay for the stuff and still had plenty of time for renovations before moving in.

If you still have a place to live and aren't getting totally screwed by changing mortgage rates, you might consider just waiting until June to close and move in.

__________________

Cmike2780

I'm definitely speaking with an attorney. I'd just like to hear from others with experience real estate if that's okay. Maybe I'm just venting, but I doubt I'm the only person who's ever had to buy a house on here. We talk about things other cars all the time, why is this any different?

We do have a commitment in writing since we're under contract that states the house needs to be vacant when we move in. Technically, the tenant's lease agreement takes precedent and he has until October...in which case the house isn't technically "vacant". If we let him stay, there's nothing stopping him from refusing to leave until then, unless there's something in the lease agreement. It's just frustrating hearing one thing and finding out it's only a half truth or flat out lie. I don't think full disclosure from my own real estate agent on a property we're buying was too much to ask.

__________________

[09][MB][6-Spd MT][Touring][Stillen Gen III][K&N][Borla CBE][Evo-R]

JARblue

I'm confused as to how the guy has a lease contract when it's not a legal rental property. I'd report the owner to the proper authority.

Also, I missed that you already put down a bunch of money. I would consult with the attorney and go from there. You may be at a point where you just need to not rock the boat.

__________________

Cmike2780

Rates are still higher than when we locked. Doing so also means we lose out on discounts for the loan officer and having to start over. Our loan is pretty much good to go and we were hoping to close early. We honestly didn't think the tenant was an issue anymore until today. The attorney told us he could leave May 1st when we signed the contract, that's why we picked the date. We were given the impression that the date was set considering there was no objection of any type from the owner or their attorney when we signed. I get they legally have until June 1st, but doing so in nothing short of a **** move by not letting us know of their decision with the tenant until now.

__________________

[09][MB][6-Spd MT][Touring][Stillen Gen III][K&N][Borla CBE][Evo-R]

Cmike2780

I don't get that either. Is that lease agreement binding? Legal? If we report them to the town, it doesn't really get us anywhere. Just piss off the owners and they can end up not closing until June 1st regardless.

__________________

[09][MB][6-Spd MT][Touring][Stillen Gen III][K&N][Borla CBE][Evo-R]

theDreamer

Going to pass this along to my father who is a Realtor in Texas, so he might have some info but different states & laws can apply.

First step is call a lawyer who specializes in home/rental.
Second you need to get a copy of any legal or illegal agreements that the rental person has signed or agreed to. If it is informal and just peoples word, then get it on record and if so a signature they agree that this is what is stated.

From this point on you need to collect a paper trail of everything and speak with an attorney asap.

__________________
theDreamer's Z // Fast Intentions // Uprev // GTM // HKS // TEIN
theDreamer's Silvia // URAS // GREDDY
Houston Zs // Facebook // Twitter // Instagram

MacCool

What's the likelihood that getting an attorney and starting legal eviction proceedings will get The Professor out any sooner than June 1? My guess is "zero". In most states, he would have a legal right to a minimum of 30 days after being served eviction notice. Conceivably he could entitled to more if it's not a Termination for Cause. Sounds like he's trying to be a nice guy about the whole thing.

MacCool

Easy there. I meant no disrespect. How hard would it have been to have mentioned that little attorney tidbit, just to clarify the "venting" component of your post?

What did the attorney tell you?


.

10MPlayer

You need to think about the renter. He's the innocent victim in this. He knows he needs to leave and he's making plans to do so. Think about yourself in that situation. Is a few more days really going to make that big a difference in your life? Chances are you'll be there for the next five years or more. Are you even going to remember those 15 days 5 years from now? I'd work with the renter. Why d*ck him over and be a total jerk about it just because you can?

__________________
About my name: I occasionally play a Conn 10M Tenor Saxophone - so 10MPlayer

theDreamer

Sending you a PM now to relay some information to help.

__________________
theDreamer's Z // Fast Intentions // Uprev // GTM // HKS // TEIN
theDreamer's Silvia // URAS // GREDDY
Houston Zs // Facebook // Twitter // Instagram

Cmike2780

I'm not trying to D*ck him over, the owners should have been responsible in letting him know about the sale. They had plenty of time to come up with a plan and we were told the tenant leaving wouldn't be an issue when we placed the initial offer. I feel for the guy, he's not to blame per say, but he is the issue that's holding up the closing. A 30 day extension for the rate amounts to about $1500. Not a lot in the big picture but still a good amount. I'm not trying to be a jerk. We were lied to and now we're going to end up losing money for no reason. It could have been avoided if they told us when he could really leave at the beginning of negotiations. We wouldn't have bothered locking in the rate had we known.

__________________

[09][MB][6-Spd MT][Touring][Stillen Gen III][K&N][Borla CBE][Evo-R]

Cmike2780

Sorry. Just really frustrated at the moment. Didn't mean to sound dickesh

__________________

[09][MB][6-Spd MT][Touring][Stillen Gen III][K&N][Borla CBE][Evo-R]