Buying A Foreclosure Property with Tenants?
Topic: Registration, How-To, Foreclosure Auction, Tax Deed Auction, Eviction, article by Tony Stern
You just got a fantastic winning bid at a County Foreclosure Auction, and you can already see the dollar signs. You got this property at an excellent price after all your due diligence, you know it’s time for the bubbly. After paying for the property at the Clerk, you drive over to the house, and there’s just 1 problem. There are people still living there and they aren’t moving. You know you need to act fast to protect your investment and begin the flip, but what is next? What are the legalities of what you need to do, and how can you avoid all the anxiety and fear that is typically involved with an eviction?
Best Case Scenario – Ask them to leave nicely
Sounds crazy but asking nicely can go a long way in some cases. Before bringing out your big guns with lawyers and spending money on various other things, ask them to leave. We would not recommend entering the house to talk to them for legal reasons, and you should always be cautious before attempting to talk to previous owners as for obvious reasons they might be hostile. Use your best judgement on which areas & properties you think you can engage in a dialogue with the previous owners and let them know the property has been sold at auction and you are the new owner.
Is there an elderly couple living there currently? Maybe they just need to talk to someone to understand what is happening and what to do? Perhaps there’s a single mother in there with no resources. Talking to the current occupants will help you understand what you are dealing with and what approach is best to take. Sometimes it helps to strike up conversations with neighbors about the occupants using discretion of course. Knowledge is always better to have in all situations and all it takes is an introduction sometimes.
There are many cases where this just isn’t practical. If a property is in a bad neighborhood for example and the occupants are hostile, or perhaps you are buying from a different market or out of state even. Sometimes you just have a gut feeling which type of approach to make, for most this next option is the first one.
Not so Bad Scenario – Cash for Keys
After receiving title to the property, try to offer the current occupants "Cash for Keys". The transaction goes something like this: Approach the occupant either yourself or with an associate, and offer to cover the cost of a moving truck and $500 on top of that if they agree to move out and leave the property "Broom Swept" clean and hand you the keys on the way out. The amount you give them for this offer honestly depends on the neighborhood you bought your foreclosure property in. Some people that have been foreclosed on will jump at $500 and a moving truck, other in more expensive neighborhoods might need $1,000 instead.
Most that teach how to offer "Cash For Keys" will raise an eyebrow at the two-part offer, moving truck expense and cash on top of that. In this author’s experience, some tenants simply are not capable of planning a move themselves and will simply give up once they realize they have no way to move things, their cousin’s car isn’t big enough etc. By offering to cover the cost of a moving truck it gives them incentive to go book a truck immediately or ask for your help in securing a truck if they do not have insurance or a license etc. This is an extra step we do to make the move out as simple and quick as possible for these people. Kindness when dealing with a person losing their home goes much further than hostility & brute force.
Use your own judgement and negotiating skills when making this offer. The idea is to make the occupants move out quickly and without malice, you are there to help them out of a bad situation, you are the good guy. Instead of spending money on an eviction and risking the occupants retaliating and damaging the house, you just apply a little palm grease & kindness.
Remember many of these people that have lost their homes to foreclosure were innocent renters who unbeknownst to them were renting from landlords not paying the rent. These people are upset and scared, and many cannot afford to move on short notice. Your goal is to preserve the property and get them out as quickly as possible, and if you can help someone at the same time, that’s great isn’t it? They aren’t the enemy here, time is.
Not that Great Scenario – Begin the Eviction Process
Ok, so you may have tried talking to the current tenants in your shiny new property you just won at foreclosure auction, and they aren’t responsive. Many times, investors skip the easy route and just go for a textbook eviction as part of their investing strategy. Either way it’s time to bring in the legal team and get these people evicted as quickly as possible without violating anyone’s rights. If you do things the wrong way at this point you may end up with all kinds of delays and legal headaches, do it right the first time.
Evicting tenants, yourself is not that complicated of a process. You need to serve them a 30-day notice of eviction, and then secure a ‘Writ of Possession’ in court that gives them 24 hours to leave the property. Many investors do it themselves, others have their attorneys handle it. There are even specialty niche eviction services that do it all for you including a move out if necessary.
Tenants that have been in residence prior to the auction must be sent by registered mail and for extra measure have posted on the door (take a date timed picture) a 30-Day Notice of Termination, failure to do this at the time the title is issued will leave you with a giant headache trying to force the tenants to leave. It is important to understand that by Florida law the people can stay in your property for those 30 days, you cannot force them to leave earlier.
Most tenants will leave during the 30 days. Some won’t.
Worst Case Scenario – Sherriff has to kick them out forcefully
After 30 days if the tenants refuse to leave you must file a motion for a ‘Writ of Possession’ with the court. If the court awards you with a ‘Writ of Possession’, it will be served on the tenants by the local Sherriff’s Office. The tenant then has 24 hours to move out, failure to do so will mean eviction by the Sherriff with you in attendance and a locksmith to replace the broken locks the Sherriff may have smashed to gain entry.
It is after this point where you or someone working for you will remove all their belongings and place them on the curb. Florida law states anything under $500 you are free to do whatever you want with the possessions, but anything over $500 you have certain responsibilities & storage requirements that vary based on location & situations. This is something you need to research on your own and will be a topic of further articles.
We have all seen the sad sight of someone being kicked out with all their belonging on the front curb lawn. It’s not something anyone wants to do to another person, and it should be done only when all other options are exhausted. It may be gut wrenching, but you have purchased this property legally, you have filed all the paperwork with courts, served the tenants every legal notice required. Some people just don’t accept reality until it hits them in the face unfortunately.
Don’t forget to change the locks immediately after you take possession of the property. This is something you should do whether your newly purchased foreclosure auction property has tenants or not. Who knows how many keys are floating out there and who has access to them and now your house!
Some investors post a notice of termination on the door whether there is evidence of tenants or not as a precautionary measure as you don’t want a tenant turning up and trying to claim their rights as you are starting to demolish the property. Always be safe and remember to consult a real estate attorney before attempting to evict for the first time!