Buying a soon-to-be vacant townhouse.. what to watch out for?

[TommyK]

Hi fellow REIN members.
I am in the process of purchasing a townhouse that is currently tenanted, but will be given 30-day notice. My completion date is October 1st. The seller promises to have the tenant out by the end of September (the current tenants are only paying $1000 a month, way way too low in this area).

I already asked the seller to have tenant sign something to agree to move out by the end of September.

My questions are:

1) Since the seller has the dmg deposit, who should pay for the dmg after the tenants move out? (and I have taken over the possession of the property on the 1st?)

2) Is there a way I can start showing the place while the tenant is still there? (knowing that I am not the landlord of the property yet?)

Any input is appreciated.

Thanks!

 

[dplummer]

If it was me, I wouldn`t close until it was vacant. I`d have the damage issue settled in my purchase agreement. As you don`t own the property yet you`d have to have the vendor & the tenant both agree. I don`t know that I `d want to show it until I know I own it & the present tenant is gone. You can have the place nice & clean & any repairs/paint completed before you show it. Just my 2 cents. Best of luck!

Doug

 

[Dan_Eisenhauer]

Doug raised an interesting issue. What happens if the tenant destroys the property prior to moving out? The answer should be in your agreement of sale.
In the future, if you want vacant possession, write a condition into the contract that the seller is to give the tenant notice to vacate, and close 30 days after the end of the tenancy. That should give you and the seller time to work out any tenant damage issue.

 

[GarthChapman]

The purchase agreement should have a term stipulating the condition of the property will be as viewed on susch and such a date, with photos to back that up - and - with a very specific monetary penalty provision if it is not. Otherwise you will likely have a very tough time collecting for damages. It is tough to enforce a term in a contract without a definate penalty provision.

 

[donksky]

As I posted in a recent Real Estate entry on tips for closing day - have yourself or your realtor do a walk thru day b4, or best - morning of the closing (assuming closing is at noon in most provinces?). If anything looks different than you have photographed, or seen b4 (make sure to check/open appliances - I ended up with shower fixtures taken & fridge full of mould and $340 worth of junk pickup & $200 for cleaning), do a HOLD-BACK with your lawyer - call him/her morning off & report what`s wrong -they will hold back monies from the vendor, subject to the problem getting straightened out - or they don`t get this money. I found a broken aircon 3 days b4 closing (that used to work 2 weeks ago during inspection) and my lawyer did a $2000 hold back on closing day since the repairman was just about to show up (never did) on closing day. This should protect u from any last minute damage. A good realtor should offer to do this for you if you live far or even if you`re in town. If you`ve hired a property manager you can instruct them do it to but you have to put in clause in purchase agreement the right to have manager, contractor, yourself, etc. enter the property on x day`s or x hours` notice. You can also put in a clause to show to prospective tenants on 24 hours` notice if u wish to show b4 closing.

 

[Thomas Beyer]

QUOTE (TommyK @ Aug 30 2008, 11:18 AM) 1) Since the seller has the dmg deposit, who should pay for the dmg after the tenants move out? (and I have taken over the possession of the property on the 1st?)

Assuming the tenant is still in the house when you close, the damage deposit gets adjusted at the lawyer. It will be credited to you. It is important that you receive a copy of the lease, and a copy of his written notice to vacate. It should have been in writing as part of the contract. If it wasn`t, ask for it (or have your lawyer ask the seller`s lawyer, incl. a move-in report, if available)

QUOTE (TommyK @ Aug 30 2008, 11:18 AM) 2) Is there a way I can start showing the place while the tenant is still there? (knowing that I am not the landlord of the property yet?)
You need it in writing in the contract that you have the right to show the unit. This is commonly not done - hence it must be done in writing, subject to landlord-tenant act, which is 24 h notice in writing to tenant (plus some more time to owner to get keys, have someone he trusts with you .. etc. ..)

Once you own it, you also must give 24h notice to tenant.

30 days notice may be insufficient depending on province. In some province you cannot just cancel a lease.

 

[TommyK]

Thank you so much for the replies. At this point, I will get my realtor (and myself) to do a walk-thru inspection on the day of closing (and compare the result to the inspection before condition removal date). If there`s any major damage, we will do a hold back until the issue is resolved.

This is part of my learning process.