Is it wrong to buy a house that has existing tenants?
If you find out the home you're interested in buying has existing tenants, you might feel a bit queasy kicking them out. But should you?
When Sally from San Francisco found out her landlord of eight years planned to sell the two-bedroom home she and her husband shared, she was understandably upset. The rent was so low, they knew they'd be facing a spike in their bills. "Our landlord is planning on selling the house to get some money for a down payment to buy [his own home]."
She understands his needs, but he's asked her to move out so he can sell it. Legal issues aside (in California, there are very specific rules about how you can ask tenants to leave when you sell), Sally feels she's getting a raw deal.
How should you as the potential new owner feel?
If Sally's story would make you feel guilty, you're not alone. But do you have a moral obligation to the people who are currently renting? Leslie in Pennsylvania feels you do.
The mother of two disabled kids, her landlord decided to sell the house she was living in. The problem? She'd previously been living in another house owned by the same person, but had been asked if she wanted a different house. She agreed because the house would be a safer distance from the main road for her kids. After over 10 years of tenancy, the owner suddenly gave her 30 days notice. She had no recourse because she was on a month-to-month lease (the landlord's doing when she originally moved in). Her children were forced to switch schools as a result of the move, a much more traumatic experience for a disabled child.
Ethics aside — buyers of occupied homes beware
The owner of a home has the right to sell regardless of a tenant's personal circumstances (and the owner may have their own personal circumstances that necessitate the sale). The only thing that governs what happens is the lease they signed. But there are a few things you should know about that.
While laws vary by state, you're typically governed by that lease after you buy. If they have three years left on the lease, you may be responsible for honoring it. If you're buying in order to rent yourself, that may not seem so bad, but there may be laws about raising the rent, and you have no idea what kind of tenants they really are. If the old landlord was a softie, they may be habitually late on rent, cause damage to the home on a frequent basis and more. The current owner may not tell you that if she's desperate to sell.
In some states, if you kick a tenant out early, you may owe them a portion of their moving expenses, money to pay first month's rent, etc. If you agree to buy not knowing this, you'll get stuck with the bill while the person who originally signed the lease pays nothing.
If the house you're interested in is currently occupied, you need to get a copy of the lease agreement and talk to a qualified real estate attorney before moving forward. The attorney, with the assistance of your real estate agent, will be able to help you negotiate any special terms that must be met.
Randy Ganther of Wisconsin West Properties in Eau Claire has some additional insight for buyers who may be worried about disrupting current tenants. He says, "In either the case of a long-term lease or a month-to-month lease, when the tenant has to leave due to a sale, it is really just a function of the time frame the tenant initially agreed to. Therefore, it should never be a surprise unless the owner is attempting to break the law."
In the end, only you can decide on the ethics of kicking someone out of their home. What do you think? Should you purchase a home where someone lives and ask them to vacate? Tell us in the comments below.