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Category: Real Estate Law
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Experience:  20 years extensive experience in real estate law, foreclosure, finance, and landlord tenant law.
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I am a buyer, I have executed a contract on a home with a seller

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I am a buyer, I have executed a contract on a home with a seller for $532,500. The home is a vacation rental and will have renters in it during the middle of the scheduled closing date. The contract does not say what we will do with the renters that are already booked. My seller seems to be getting sellers remorse and is trying to get more money out of me by not agreeing to have the furniture convey. He knows I need the furniture for the renters. Since they are vacation renters, not long term tenants, can I just say we have a contract, make sure when we close there are no renters in it because I'm moving in?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  LawTalk replied 1 year ago.

Good afternoon,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

Buying a home that is currently rented is always a bit greater a transaction than one which is unoccupied. Because you are aware of the renter's rights, you are obligated to allow them to finish out their contract---and you are also entitled to the rent from the time of closing forward. If the landlord has been paid in advance, you must arrange to be credited with that rent in your closing.

If he tries to remove the furniture before the end of the rental period the renters can sue him for breach of contract and constructive eviction---it could be very ugly for him. While you must abide by the rental agreement, he may not do anything to interfere with the lease---or he may be sued by them and by you if he does it after closing.

You may reply back to me again, using the Reply to Expert link, if you have additional questions.

I wish you the best in your future,

Doug

Customer: replied 1 year ago.


Doug,

 

My sales agreement and addendums are located here:

 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

These is a signed addendum changing the title company:

 

 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

This is an addendum we were trying to write (after the ratified contract) going to use to handle the transfer of rents/furniture but he doesn't want to sign it - does that matter due to the existing contract?

 

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXx

 

Is it an enforceable contract?

Expert:  LawTalk replied 1 year ago.
Good afternoon,

You are asking that I review a complex property sale contract. This makes this question much more time consuming and complex than originally stated. You have the "offer more" disabled so I have no way to offer you additional service for a greater payment.

I am simply not in a position to take on this amount of work under the circumstances. Additionally, in asking for your contract to be evaluated, you are in effect making me your attorney---and that is specifically prohibited by the riles of JustAnswer.

I am unable to further assist you in this matter, and I am going to opt out of your question and open this up for other professionals.

Your JustAnswer Account has not been charged for this conversation and your question is being placed back in the question list for other professionals to see, and to respond to. You do not have to stay online for the question to be active. Should another professional pick it up, you should be alerted by email unless you actively disable this feature.

There is no need for you to reply at this time as this may "lock" your question back to me, thus inadvertently delaying other professionals' access to it.

I apologize for any inconvenience and wish you well in your future.



Doug
Expert:  Law Pro replied 1 year ago.
New expert here. Allow me to assist.

You are bound by the last executed contract unless you can void it pursuant to a contingency.

Always a buyer buys the property subject to existing rental obligations. However, the new buyer also gets the rental income as soon as they close on the property - from that point forward.

As to the furniture - I agree with the previous expert - that the seller is liable for any breach of contract and would be doing such if they removed the furniture during a tenant's stay and the vacation property.

However, they can remove the furniture inbetween rentals if there is time. Then it would be your obligation to provide the tenants with furniture.

Furniture is something that is personal property - not a fixture - and if not specifically stated in the contract the seller can remove it.

This is presuming that the furniture has value. I have seen it the other way and the seller left all types of junk around and the buyer had to sue the seller for the cost of the removal.

However, there should be a "final" walk-through just before closing which would show what furniture and property is there. If not as agreed upon in the sales/purchase contract - then the buyer should not close and notice the seller as to "time is of the essence" and set date for closing if not already done. Then if the closing doesn't occur the buyer has their remedies pursuant to the sales/purchase agreement including pursuing specific performance in the transfer of ownership of the property.

Customer: replied 1 year ago.

I am financing the purchase with a 2nd home mortgage. I talked to my lender whether it was allowed to do this and they said that I have a 45 day rental grace period at the beginning of the loan if renters are already occupying the property. 45 days after closing I am not allowed to have renters in it.


 


The seller knows this, so he may try to book a rental past my 45 day window, jeopardizing my ability to obtain financing. If this happens will I not be able to obtain financing and lose my earnest money or will I be able to cancel any future scheduled rentals with vacation rental tenants?

Expert:  Law Pro replied 1 year ago.
I am financing the purchase with a 2nd home mortgage. I talked to my lender whether it was allowed to do this and they said that I have a 45 day rental grace period at the beginning of the loan if renters are already occupying the property. 45 days after closing I am not allowed to have renters in it.


As to this - first you should already know if the seller has renters booked for the summer and for what time period they are booked for. Again, you buy the property subject to the vacation rentals the seller has booked. Those vacation rentals are like small tenancies for the period for which they are booked.

Moreover, that he can't rent beyond 45 days after the scheduled closing should been made as part of your sales/purchase agreement - or if the seller had done so before the sales/purchase agreement was executed, the closing be pushed back to comply with the lender's demands.

However, I'm sure that your lender is not going to do a physical inspection after the closing and funding of the loan to make sure there are no tenants. They do not have the resources nor will make the commitment to do such. Even if there is 1 rental after the 45 days - your lender most likely won't know about it unless you inform them AND it would be a huge expense and ministerial breach of the loan if there was. You thereafter will just have to comply with the loan requirements.

Technically, as soon as the sales/purchase agreement is signed - you are the equitable title owner of the property now.


Equitable title is the right to obtain full ownership of property, where another maintains legal title to the property. Legal title is actual ownership of the property. When a contract for the sale of land is executed, equitable title passes to the buyer. When the conditions on the sale contract have been met, legal title passes to the buyer in what is known as closing. [Wikipedia]

This should all be a part of the sales/purchase agreement between you and the seller.

You also asked:

The seller knows this, so he may try to book a rental past my 45 day window, jeopardizing my ability to obtain financing. If this happens will I not be able to obtain financing and lose my earnest money or will I be able to cancel any future scheduled rentals with vacation rental tenants?


As stated, it should be stated in the sales/purchase agreement that they aren't to book any more rentals beyond the scheduled closing date. If the agreement is silent on the issue then you buy the property subject the already scheduled rentals.

That is always the case - a buyer buys the property subject to the existing leases. A vacation rental is a lease - although only for a short time - it's still a lease.


Thank you so much for allowing me to help you with your questions. I have done my best to provide information which will be helpful to you. If I have not fully addressed your questions or if you have any follow up questions, or if I have misinterpreted your questions in any way, please do not rate me yet, but simply ask a follow up question without rating so I can provide you with a fully satisfactory answer. If I have fully answered your question(s) to your satisfaction, I would appreciate you rating my service with 3, 4, or 5 faces/stars so I can receive credit for helping you today. I thank you in advance for taking the time to provide me a positive rating!


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