How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Ray Your Own Question
Ray
Ray, Lawyer
Category: Real Estate Law
Satisfied Customers: 36973
Experience:  Texas Attorney for 30 years dealing in real estate
8534270
Type Your Real Estate Law Question Here...
Ray is online now
A new question is answered every 9 seconds

This has to do with possession at closing. The contract

Customer Question

This has to do with possession at closing. The contract requires me to give possession at closing. The thing is I have a tenant who I don't want to move out until I'm sure the transaction will complete. I know from past experience that the closing is not
assured until it's funded, as the lender may ask for something new at the last minute that kills the deal. My question is this - Does "possession" necessarily mean the house is vacant? Could it also mean that the buyer is inheriting my tenant and then the
buyer can deal with the tenant after the closing? In fact, the house will be transitioning from a rental to owner-occupied, but would the lender still fund if the tenant is still in the house and can the buyer reject the deal at the last minute for the same
reason? Am I fulfilling the contract terms by giving them the keys to a rental and then the tenant will move out 1-3 weeks after the close?
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Ray replied 1 year ago.
Hi and welcome to JA. I am Ray and will be the expert helping you tonight. The closing here should reflect that the property comes subject to the existing tenant and lease here.Otherwise you would have to get rid of the tenant.As long as you include it in the sales contract and closing documents you would be fine.You cannot close promising a property to the buyer if there is an existing lease.It needs to be included and agreement reached. The problem here is whose problem it is if they don't leave.If the buyer agrees that it closes subject to the lease then its their problem if tenant doesn't leave.It is normal with a rental property that this be included because they understand they are buying it subject to the lease.This should not be a problem if it is included in the sales document and buyer is aware and in agreement here ahead of time.It is an issue that needs to be resolved prior to closing. I appreciate the chance to help you tonight.Please let me know if you have more follow up.Thanks again.
Customer: replied 1 year ago.
There used to be a long term lease but now it's month to month. The contract is already in effect and the transaction is two weeks away from closing date. The contract does not mention the tenant. I'm looking for the answer to my questions with my present situation - no mention of tenant in contract. With that in mind, would you answer again:1] Does "possession" necessarily mean the house is vacant? Or can I have satisfied the Possession even tho the tenant is still there, just like if I was selling it as a rental?2] Would the lender still fund if the tenant is still in the house?3] Can the buyer reject the deal at the last minute if the tenant is still there on closing date and not planning to move for 1 - 3 weeks?
Expert:  Ray replied 1 year ago.
1] Does "possession" necessarily mean the house is vacant? Or can I have satisfied the Possession even tho the tenant is still there, just like if I was selling it as a rental?Yes it does unless contract states it come subject to tenant here.
2] Would the lender still fund if the tenant is still in the house?
No unlikely because they are promised possession and clear title.
3] Can the buyer reject the deal at the last minute if the tenant is still there on closing date and not planning to move for 1 - 3 weeks?
If you cannot resolve it here the buyer can cancel the deal because you promised them the house and clear title.The renter is a problem until you resolve it.You should have realtor discuss with buyer and seek resolution here.Maybe they agree and it is not a major deal, then again it might be if they expect possession here.You have agreed to give them an empty property since sales contract did not specify otherwise.
I hope you can resolve this matter and save a sale here.Maybe it is not a big problem to buyer.
Thanks again.
Read more: http://www.justanswer.com/real-estate-law/987ms-possession-closing-contract.html#ixzz3hW3968DM
Customer: replied 1 year ago.
So, you're saying that even though the buyer knows there is a tenant, and there is no mention of a tenant in the contract, that "Possession" in my situation cannot mean I'm turning over a house that is occupied by a tenant who will be moving in a matter of weeks as if the buyer were an investor but:1] it can only mean the house has no occupants at all? And2] both the buyer and lender are free to walk away if there is a tenant at the closing who is planning to move in a couple of weeks?
Expert:  Ray replied 1 year ago.
Yes it needs to be included in the sales contract, it is a problem if the buyer did not acknowledge and agree to it.They may do that and it may not be a problem.But if it is not addressed you don't not consider it is a problem.Whether it is or not will depend on the buyer and if they are comfortable with an addendum that sets out that sale is subject to existing tenant.And the issue here if who gets the rent for the small time period.If it closes the remaining days ought to be payable to new owner after date of closing.And if you have this in an addendum then if tenant doesn't vacate its the buyers problem, same with any damages.Also you need to address the security deposit normally this is transferred at time of closing to new owner.Talk to your relator about these issues likely they can be resolved with an addendum of the existing contract here. Thank again good luck here with closing.

Related Real Estate Law Questions