They have 7 months left on their lease and I want to short sale the property to people that plan on living in it and must take possession upon close of escrow. What do I have to do to get the tenants out without any legal problems? They have been cooperating fully with the showings of the property.
Intellectual Property Law Attorney
You can ask the tenants to leave. They may be willing to go if you offer to pay their moving expenses and some rent at their new home. (Essentially, you are paying to buy out the remainder of their lease.) If you do this (with the tenants' agreement), you should have a lawyer draw up a simple contract stating the terms you've agreed to. This will provide you the best protection against legal problems later.
If the tenants will not agree to leave, then you may be liable for damages if you sell the house and the new owner evicts the tenants. See a lawyer for advice on this situation _before_ you make or accept an offer to sell, and certainly before you close the transaction.
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Real Estate Attorney
You really cannot evict them early. even the new owners have to give 90 days notice. Your only option is to offer them money to move early.
The Protecting Tenants at Foreclosure Act, Pub. L. No. 111-22, §§ 701-704 (2009), which became law on May 20, 2009, applies to state eviction proceedings.
This act requires that a new owner who took title to residential rental property through foreclosure must honor existing leases until the end of the lease term.
There are three exceptions to this rule: 1) if there is an existing term lease and the new owner wants to occupy the foreclosed property as a personal residence before the end of the lease term, 2) if there is an existing term lease with less than 90 days to the end of the lease term, or 3) if the existing lease on the foreclosed property is a month-to-month tenancy or a tenancy at will. In each of these cases, the owner must provide the tenant at least 90 days notice to terminate the tenancy.
The response given is not intended to create, nor does it create an ongoing duty to respond to questions. The response does not form an attorney-client relationship, nor is it intended to be anything other than the educated opinion of the author. It should not be relied upon as legal advice. The response given is based upon the limited facts provided by the person asking the question. To the extent additional or different facts exist, the response might possibly change.
I agree with attorney Madden. If you sell the property short it is not technically a foreclosure, and the lease will run with the land and the new owner will be bound by it. Your best recourse is cash for keys, or the new owner takes the property subject to the lease and waits until the end of the lease term (probably not a viable option).
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