Tenant Not Allowing Entrance to his Unit

[Nir]

Hi All,

I put an offer to purchase a multiplex recently. When viewing the property my real estate agent and I could not enter one of the units. Apparently, the tenant is not letting anyone in or something like that for some reason. (however they are all long term tenants so let`s assume he is paying the rent The offer is obviously subject to a satisfactory home inspection. What should I do if even the home inspector does not have access to that unit during the inspection for some reason? Have you ever had to deal with this situation? Is it legitimate to ask the home inspector to come again another time in case there is such an issue without being double charged for example? Should I absolutely not purchase the property/wave the condition unless the home inspector has access to all units??

I clarified to my real estate agent the importance of entering all unit during the inspection. Was just wondering how other investors suggest to deal/have dealt with this situation(?)

Thanks,
Neil

 

[Ponygurl]

Hi Neil,
I wonder if we`ve been looking at the same property? I recently walked away from a deal that was almost ready to close - similar scenario, insisted to see a unit that the realtor did not want to show due to (supposed) tennant access issues and I was thankful I did.

At the time of the building inspection, the realtor had a big story on how he couldn`t get a hold of X tenant, they were on vacation, whatever, and he had promised all the tenants that he would get permission before showings. Legally, they just have to post a notice I believe. Despite lots of notice for the building inspection, the realtor would not get us in to one of the 6 units. Add on several other deceptive moves by the seller`s realtor and I am getting really suspicious.... but the rest of the building is really nice, clean, neat, good mechanical shape, numbers work, lenders lined up, it`s all good, right? I almost gave in, thinking I was being unreasonable wanting to see all of the units...

Time for the appraisal. Realtor is still dragging his feet on letting me in to see this unit. I insist, something is smelling fishy and I am too new to this game to go ahead sight unseen. Well, it`s like this unit was from another planet! The appraiser was as shocked as I was. Said it was the worst cast of mold he had ever seen. Tenant there 12 yrs, place is filthy but worse yet ceilings are covered in 1/2"of fuzzy black mold. It`s everywhere! No ventillation anywhere, the place is black and disgusting. Bathroom ceiling, walls, but even worse is the bedroom ceiling. Really, 1"fuzzy black mold. Public health hazard kind of scary mold. Plus, as an added bonus the walls are orange with dripping streaks of smoke stains. I nearly puked.

This wasn`t a case of unit needs a "reno", it needed a "demo"!!! I think a full demolition of the unit would have been needed, there was that much mold. Serious negative impact on outcome of the appraisal and previously healthy financial analysis of the property. You would have never guessed, from seeing the rest of the place/other units. No big issues w/the rest of the building inspection.

So, expensive lesson for me. Personally, I will never ever accept building inspection without seeing all of the units. I will make sure future offers I write nail out that access to all the units for inspection is a must.

If in your case you go ahead and arrange a home inspection, confirm that all units will be available at the inspection and be there to be sure it happens. If the unit is not accessible at the time of the inspection, expect additional fees if you want the inspector to return to see it at a later date. If you anticipate problems getting into this unit, I`d reinforce w/the seller`s agent that you need confirmation that notice has been given to this tenant and that your building inspector will have access to all units.

Good luck!

 

[Nir]

Hello Ponygurl,

THANK YOU VERY MUCH FOR THE QUICK RESPONSE AND EXCELLENT FEEDBACK!!!

It is probably not the same property as the one I saw has less than 6 units.

I will definitely make sure I see this unit before releasing the conditions and will not purchase it otherwise.

Regards,
Neil

 

[Dan_Eisenhauer]

If the owner/property manager has given the tenant proper notice, the tenant has NO right to bar access. The owner or his/her agent should be there to allow you in with their keys.

I would insist on seeing that unit before you spend a bunch of money on the extras like inspection and appraisal, especially if the rest of the building is marginal. How comfortable do you feel about proceeding if this unit is a total mess? Does the deal still make sense if it is a mess? One crappy unit out of 4 is much different than one unit our of 12 or 20.

I, too, have walked from deals when I was unable to gain access to everything, or when I was not given the documents spelled out in the agreements. Sometimes you just have to say, "Enough is enough.", and cut your losses.

 

[GregGillespie]

QUOTE (Dan_Eisenhauer @ Sep 18 2008, 10:16 PM) I would insist on seeing that unit before you spend a bunch of money on the extras like inspection and appraisal, especially if the rest of the building is marginal.

Very good point, Dan. In addition to our realtor, we now include a walkthrough by our property manager as well...after all, they are the ones who have to get it rented in the end. Only after we get satisfactory reviews from our initial team walkthroughs do we proceed with any expenses such as an inspection.

Greg

 

[Nir]

Dan and Greg,

Thank you for your GREAT input/ideas. I learned a lot from this thread.

Neil