Cash for Keys & Eviction


#1

Thanks to foreclosure radar, I have now purchased 3 homes at auction. The 1st two were vacant, so I did not have to deal with occupancy issues. I bought the 3rd house today and it is occupied. I have read much on the forum about the subject, but still lack the step by step knowledge to get the occupants out.
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I think the owner lives there, but I have reason to believe that there may be renters living there. So, i am wondering how to start the process. Do I treat them like tenants and give them an eviction notice, but also offer them CFK? Does the law treat the owner like a tenant? Meaning, do I follow the State of CA regulations on eviction for the owner?


#2

Congrats on your great success… we love to hear that.
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Start with trying cash for keys, and while doing that, do your best to assess whether it is occupied by the prior owner, renters or both. If you can’t determine you might start with a 3 day notice… the risk being that you’ll have to refile the notice and start over if they turn out to be renters. Be sure to find a good local eviction service, they can guide you through this and I have found it worth the cost vs. doing it yourself.


#3

I met with the occupants the day after the auction. I weighed the risks and benefits of doing this before I got the Deed and decided it was worth it to make contact. The house had been in a short sale, but went to auction anyway. I think this was because the 1st? and 2nd were not with the same lender and the 2nd was not willing to sign off on the deal. As a result, I reasoned that the occupants knew they would be moving, it was just a matter of time.? When I met with them, they already knew that the foreclosure sale had occurred, but I think their realtor told them it went back to the bank.
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I brought a CFK agreement with me when I met with them. The occupant is the owner and her family. I had done research on this property several weeks before the sale and knew that the woman who was the sole signer of the TD was a Mexican woman who spoke very little English and was a house cleaner. After meeting her and her family, I became angry at the realtor and loan broker who took advantage of her. Yes, she signed the documents and got to live in the house for 2 years, but they overbid the home and took large commissions.
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They wanted to verify what I told them was true, so we agreed to meet again the next evening. As agreed we met the following day and negotiated a $2,500 CFK agreement that would give them 3 weeks to move out. It is a simple agreement that requires them to leave the house without damage and broom clean. At the same time, I gave them a 30 day notice. I reasoned that 30 days would be 1 week after the CFK expired and would send them a message that I was serious about them vacating. I thought about giving them a 3 day notice, but that seemed like it would be a hostile gesture and was not a good idea. I am confused about the use of the 3 day notice. What would be the reason?. Would it be for unpaid rent? I would assume I am due rent from the day of the auction. Can I ask for only back rent or can I ask for a month?s rent? Would I demand the rent, and if they did not pay it proceed with eviction? If they pay the rent would that cancel the 3 day notice? I would appreciate some guidance on the proper application of the 3 day notice on an owner in a foreclosed house.
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I have met with them a couple of times since the CFK agreement was signed. They remain cooperative. They asked me for a letter of recommendation, so I wrote a letter for them based on what I knew so far about their behavior and the condition of the home. They have allowed to take photos and inspect the house each time we have visited. But, I know they are having a hard time finding a home to rent. And, I don?t see any signs of preparation to leave. They have 2 weeks left before the CFK agreement expires. And I am starting to wonder what my next steps should be.

The Trustee’s Deed was received and recorded last week.
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#4

3 days is all that is required by law. You can always give them a 3 day notice AND a cash for keys agreement that clearly states that if they don’t perform as agreed you will proceed with the unlawful detainer action (eviction). ? Another thing that I’ll do when I give someone more than 2 weeks or $2000 is to say that the only way I’ll do more is if they’ll sign a stipulated judgement. Basically they agree to be evicted if they don’t move as agreed. This way I have the option to just file the stipulated judgement if they fail to perform and schedule the Sheriff. If they do perform the judgement never gets filed and the case is dropped. ? Protects you, while at the same time giving them more time or money then you might otherwise be willing to give. ? Having a good eviction firm (usually a paralegal(s) who has teamed up with an attorney for cases that require a court appearance), can really help. ? Sounds like they are cooperative, so hopefully they move as agreed. You’ve got a good shot.


#5

So, I could still give them the 3 day notice at anytime. If they don’t look like they are moving a week before the CFK date, then I will give them a 3 day notice. This will start the clock and tighten up the evicition timing. I did some surfing and found CA C.P. 1161a that provides the guidance on the difference between evicting a tenant and evicting a “Holdover Owner”. I have an attorney, but I think the idea of finding a paralegal is yet another great bit of advice from you. Thanks


#6

Yes, no reason to use an attorney for notices, basic filings, etc. unless they have someone on their staff that does it at paralegal rates.


#7

It has been two weeks since I first met with the occupants and gave them the news that I had purchased their home at the foreclosure auction and they had to move soon. It is a 4 bedroom house and there are 9 or 10 people living there. 5 or 6 are adults, with the children ranging in age from 6 months to early teens. This is a wonderful Mexican family. We have become very fond of them and can see that they were victims of predatory lending and affinity fraud. The realtor and loan broker made a ton of money on the deal leaving them in an impossible situation they could not have understood. They barely speak English and may not even be legally in the country.
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As a landlord, I recognized that it was going to be tough for them to find someone to rent to them. Shortly after we signed the CFK agreement, they asked me for a letter or recommendation. I was reluctant as I had known them for only a few days. Yet, I knew these were good people. This was a very difficult situation and they were handling it very well. So, I wrote the letter detailing what I knew about them and thought that a future landlord should take a closer look at them. A few days later, I got a call from a woman with a 5 bedroom house to rent. She called to discuss my letter and what I knew about them. She had been trying to rent the house for 2 months and was not having any luck. So she was motivated to work with the family as she needed to get her cash flow going. ?Her 5 bedroom house is much larger than the home they were living in so this was actually a move up.
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Today, they reported that they go the house and asked me for an advance payment on the CFK funds. I called the property owner of their new rental to confirm they were getting the house. I gave them ? of the money to help with their deposit. They will sign a lease today and it appears that they will be able to move before the CFK deadline.
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So far so good. Occupancy in this situation is an issue. Who wants to have the Sheriff evict a family like this. With a little encouragement and support from me, they were able to find a new place to live in time to take advantage of the CFK.


#8

Nice job, definitely shows that a little work upfront can make the transition easier for everyone. I don’t think I would have advanced any funds - though I might have gotten creative and given them a couple hundred extra for a moving truck with the promise I’d write the check on the new rental the moment their stuff was out of the house. In any case you seem to have developed some trust, so I’m hopeful they won’t cheat you out of the advance.


#9

CFK deadline was yesterday. Occupants moved out by noon and did a pretty good job of cleaning the house and did not damage the house in any way. For my first auction house with occupants, this went very well.


#10

Congratulations!!!


#11

good information . thank you


#12

If the the unlawful detainer has already been issued by the courts or by person A and a CFK notice is received from person B. What happens if the tenant signs the CFK? is the unlawful detainer dismissed automatically? Does the tenant get an eviction on their record?


#13

Nothing happens automatically. As an investor I would commonly proceed with the unlawful detainer (UD) even with a cash-4-keys agreement in place (though I’d let the occupant know that). Reason being that if the occupant failed to move as agreed, the UD would be farther along and I would not have lost anytime. As soon as they moved and I had possession I would dismiss the UD - but note that I had to do that proactively.


#14
  1. An eviction firm can charge $500 to start the UD process… Does merely filing the UD require the help of an eviction firm, paralegal or attorney, or is it something I can myself in order to save some money? 2) would just getting it started this way provide me any leverage against the occupant?

#15

1 - Find one that will work with you. If you plan to buy at some volume you should be able to negotiate. You could represent yourself, but my guess is that it will cost you more than you save. If you plan on doing cash for keys yourself they should provide you with the initial notice to quit at no charge (or you can find online). 2) Always seemed so to me. Let’s them know you are serious, and as I said, that the clock is ticking. Not sure I have much energy left on this topic Bob. :wink: