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I am currently under contract on a 4 unit multi family

rental property. We have concluded...
I am currently under contract on a 4 unit multi family rental property. We have concluded our home inspection, and the home inspection contingency is in the process of being removed over the next 3 days it will expire. When we ratified the contract, all 4 rental units had contracts for $1000 each. The other day, we were inspecting the 4th unit because originally there was a hostile tenant that denied us access at the first home inspection. Upon inspection, we found significant mechanical failures, electrical safety issues, and what appears to be presence of black mold. There were also tenants that were in the process of moving into the property. Apparently, the seller signed a 1 year rental contract with his niece at a rate of $600 per month. The realtor that is a dual agent mentioned to the seller that the buyer is not happy with this situation of a reduced rate, and due to the condition of the last unit, the premises needs to be vacant at closing. He is not willing to agree to these terms. I feel the seller has breached the contract by leasing the property for a lower amount, when I purchased and entered a ratified contract at all 4 units generating $1000 month each. Is there any way I can force the seller to have the tenant vacated but not lose the deal? I do not want to have to deal with relocating a tenant, and putting them up in adequate housing because I know there is black mold in the property. The home inspector took samples of the microbial growth, and he said he is 99% sure it is mold, but only the lab can make that determination. I also know that if a landlord has knowledge of mold, they must re mediate within 5 days in Virginia. If the mold comes back positive and we are 3 weeks from closing, and the home inspection contingency has been removed, what can force the current owner to either re mediate the mold, so I don't have to, or move the tenant out?I need to know my rights under this ratified contract. My goal is to have the tenant out so I can perform the repairs and remediation without being liable to low paying tenants.
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Answered in 7 minutes by:
8/12/2017
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 39,039
Experience: 17 years real estate, Realtor. Landlord 26 years
Verified

Hello and welcome! My name is ***** ***** I am a licensed attorney and will try my best to help with your situation. There may be a slight delay in my responses as I type out an answer or reply.

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You may also be offered a phone call, but those don’t come from me and are offered by JustAnswer and you are under no obligation to accept.

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At this point, if you release the contingencies, you are stuck with all the problems.. So the best option would be to identify the problems and state that you are terminating your initial offer, but submitting a new offer taking into account those contingencies.

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The fact that the seller stuck his niece in one unit at a sweetheart rate after you signed the contract would definitely be a material breach of the contract since he has a duty to maintain the property in the same condition it was in when you entered the contract. So he can't evict everyone and stick his family in there under long term leases after signing the contract..

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So you would need to basically terminate the existing contract before you are stuck in it and then make a new offer with new terms..

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thanks

Barrister

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Customer reply replied 4 months ago
I already know that the seller is not willing to modify the terms, he has made that clear. I do not want to lose the deal, and if I terminate, then its done. It appears if I do have an issue with the home inspection, then I have 3 days negotiation period which I can mention the mold that was found. There is also mention of a mediator or arbitration if the two parties cannot agree. Would you like to see the purchase agreement and terms? Is there not way to enforce the contract or have a lawyer put a lien on it if there has been a breach of contract with the sweetheart rate?

That is a material breach, but your recourse is to void the deal and walk away or you could sue him for breach of contract, which might take a year before it gets to court, and have a judge declare the lease unenforceable since the property was already under contract.

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If you sued the seller, your attorney could file a "lis pendens" on the property. This is a legal notice that a property is subject to a lawsuit and would scare off any buyers until it is released.

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If you were to file suit, it is likely that the seller would do whatever they needed to to get the niece out of the property or get the rent up to the 1000 level rather than spend thousands fighting a losing battle in court and tying up the property that long..

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But if the contract states that in the event of a breach, you have to go through arbitration first, then that is what you would have to do as the contract controls.. An arbitrator would likely award you the $400 a month x 12 months, or however long the rest of the lease is as damages..

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thanks

Barrister

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Customer reply replied 4 months ago
There is something in the contract that says if there is a problem where the seller and buyer cannot agree, then we need to go to arbitration. It doesn't say who pays for that or takes care of that. How would I find out how to arbitrate?

It should state in the contract how the arbitration is carried out... Normally it states that you pick someone at random and both sides split the cost of the arbitration. Or one party will contact an arbitrator and then initiate the process where the arbitrator then contacts the other side. But costs are always split.

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Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 39,039
Experience: 17 years real estate, Realtor. Landlord 26 years
Verified
Barrister and 87 other Real Estate Law Specialists are ready to help you
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Barrister
Barrister
Barrister, Lawyer
Category: Real Estate Law
Satisfied Customers: 39,039
39,039 Satisfied Customers
Experience: 17 years real estate, Realtor. Landlord 26 years

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