I recently purchased a tenant occupied property at an auction.
I spoke to the tenant and he is moving out in a week, however, told me that his landlord signed a new lease the day before the auction and that the new tenant is moving in the day after the current tenant moves out.
Here is my question: If work something out with the current tenant so I get keys and can take possession before the new tenant moves in, am I then within my rights to do so? I hold title to the property and am in possession. Does this supersede the fact that the new tenant has a lease agreement signed prior to the trustee sale?
My understanding is that you are royally screwed. The prior owner has saddled you with a tenant…and likely pocketed the deposit and advance rent. You likely need to negotiate with the new tenant, if you can reach them, before they move in.
Very interesting. First, know that a foreclosure wipes out all junior encumbrances – including leases, so until recently at least you would have been in great shape. The Protecting Tenants at Foreclosure Act of 2009 however, allows tenants to stay through the end of their lease and requires a minimum of 90 days notice. There are a couple of qualifications though… it must be a bona-fide lease for market value rents.
So, I’d absolutely take possession, and I’d require a copy of the lease. If it looks like some back door deal with a friend at below market rents I’d personally fight it all the way and NOT let them move in. That said, I recommend you talk to an attorney first as I’m not qualified to give legal advice.
Thanks for your comments. I should mention that the previous tenant has already paint rent until September and also has a lease agreement good through September. As far as I know the owner is not allowed to charge double rent or have simultaneous lease agreements, right? We also have proof that the owner was well aware of the fact that his property was going to sale.
Has a case like this been tested in court? The previous owner is no longer the owner, but was on the day the new lease was signed. The new tenant doesn’t have possession. We have possession and we have title. It seems to me that if the previous owner was to win a case like this, every single owner facing foreclosure would just sign a two year lease with possession some time after the foreclosure sale.
How about “Possession is 9/10” of the law"?
The above didn’t post my whole comment. I tried to indicate I was somewhat facetious with that statement. Point is - you are better off fighting off a claim of possession with a new tenant when you are in possession - rather than having the new tenant in.