From the Forum – Buying a home with tenants in place

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Buying a home with tenants in place:

“We’re in the process of buying a unit that is currently rented out. The existing lease expires in the fall. The tenants have waived their TOPA rights. We would like to move into the unit as soon as possible. Does anyone know whether a new owner has the right to terminate a lease in DC? I have read on the Office of the Tenant Advocate website that one of the 10 legal reasons for evicting tenants is if a property is sold and the new owner would like to occupy it themselves. However, OTA doesn’t make clear whether this applies only in month-to-month situations or whether it applies when there is a valid lease in place.

If we are legally allowed to terminate the lease, does anyone know what kind of notice we need to provide or could you direct me to some resources where we could find out? Also is there a set amount of money we need to give the tenants to move out? We would greatly appreciate any other tips or guidance you could provide!”

20 Comment

  • Good luck getting them to leave. Most likely you will be having this same issue for several years. Tenants never leave. I would just make it the seller’s problem and delay closing until after they have the tenants out.

    • I imagine that there would probably need to be a minimum of 30 days notice. So long as the current owner has a certificate of occupancy for the rental. If the owner does not have a COO, do NOT close the deal. It will take a looooooooong time to get these tenants out (minimum of 6-12 months). I’d make the current owner deal with it. If you agree to deal with it, knock down the price of the apartment by 10-15%.
      But honestly, I’d go to the Office of Tenant Advocate and ask them about the proper procedure.

  • My lanlord gave me 3 months notice to move out b/c they wanted their english basement back……they previously purchased the home w/ built in tenants prior to me moving in….so I thought it was fair to give us 3 months notice. It’s their house. But a huge bummer, rents skyrocketed in my neighborhood!

    • If you’re under lease, it’s not “their house.” If you’re not, 3 months is the statutory minimum notice when a landlord wants to take a property back for personal use.

  • I disagree with Anon. As soon as the tenants are out the property will be worth more, so I would complete the sale with the tenants there. As to your question, I believe you can only use the “owner occupancy” exception after their lease expires. And you have to give 90 days notice (You can give notice before their lease expires, but you can’t ask them to leave until their lease is up).

    It sounds like you have a cooperative tenant, since they are willing to wave their TOPA rights. Since you want to move into their home, why not offer them some $ to move out early?

    I recommend reading this:

  • The OTA advice refers to month-to-month tenants only. If there’s a lease in place, there’s no way to remove the tenants as long as they continue to pay rent and obey the terms of the lease. Since there are 9-10 months or so left, you’ll have to come up with some equitable proposal to get the tenants to move out voluntarily. I’d suggest starting with helping them find a suitable and comparable place, paying their moving costs and throwing in a grand or so for the hassle.
    One question, and this might sound meaner than I intend it to, but how did you buy a place that you intend to live in without looking at this issue first? Did you have a broker or other advisor? If so, you shouldn’t pay them. Also, did you represent to your lender that this is a residential (as opposed to investment) purchase? If so, you might be in violation of your mortgage agreement.

    • justinbc

      You could also ask the seller to give you some sort of credit back towards buying out their lease early.

    • I love it when the wannabe “lawyers” join us in the comment section talking about things that they know nothing about as though they actually know. 90-days notice is sufficient for an owner to take occupancy of a unit/house (with the requirement that they live there for over a year) regardless of the terms of the lease. Part of the TOPA process should be the current owner supplying the tenant notice of the need to leave within 90 days if they choose not to purchase. If they refuse to leave, then they would need to be formally evicted (no self-help). I would think the OP’s realtor should be able to advise them on this process though, so not sure why it is a forum question.

      • “90-days notice is sufficient for an owner to take occupancy of a unit/house (with the requirement that they live there for over a year) regardless of the terms of the lease.” Isn’t that only if the owner intends to live in that space him/herself? Given that the house has already been listed for sale and is (apparently) under contract, it seems like it would be too late for the owner to exercise this option and then turn around and try to sell the house.

        • D.C. Code § 42-3505.01

          (d) A natural person with a freehold interest in the rental unit may recover possession of a rental unit where the person seeks in good faith to recover possession of the rental unit for the person’s immediate and personal use and occupancy as a dwelling. The housing provider shall serve on the tenant a 90-day notice to vacate in advance of action to recover possession of the rental unit in instances arising under this subsection. No housing provider shall demand or receive rent for any rental unit which the housing provider has repossessed under this subsection during the 12-month period beginning on the date the housing provider recovered possession of the rental unit. A stockholder of a cooperative housing association with a right of possession in a rental unit may exercise the rights of a natural person with a freehold interest under this subsection.

          (e) A housing provider may recover possession of a rental unit where the housing provider has in good faith contracted in writing to sell the rental unit or the housing accommodation in which the unit is located for the immediate and personal use and occupancy by another person, so long as the housing provider has notified the tenant in writing of the tenant’s right and opportunity to purchase as provided in Chapter 34 of this title. The housing provider shall serve on the tenant a 90-day notice to vacate in advance of the housing provider’s action to recover possession of the rental unit. No person shall demand or receive rent for any rental unit which has been repossessed under this subsection during the 12-month period beginning on the date on which the rental unit was originally repossessed by the housing provider.

          • So basically 90 days from which the unit goes under contract, regardless of the lease status (so long as the OP is moving into the new unit).
            The OP could offer the current renter a financial incentive to move out earlier. The OP should crunch the numbers and figure out if it’s worth it to offer the renter a financial incentive, instead of throwing money at rent for three more months.

  • Sounds like you’re going to be a landlord for the next 10 months, at least. I wouldn’t cancel your current lease quite yet…

  • I hope you’re able to sort these issues out to your satisfaction BEFORE you commit to buying the property. My guess would be that you would at least have to honor the terms of their current lease – although you could make it worth their while to move.

    • +1. Not sure where you are in the process (presumably you’re under contract?), but if you have any remaining contingencies, you might need to exercise them to get out.
      If you have a real estate agent, it sounds like he/she is not very knowledgeable — he/she shouldn’t have gotten you under contract without knowing the applicable tenant law and relaying this information to you.

  • Call an attorney – it’ll be cheaper than free advice from a blog.

  • When we were buying our house, a “friend” of the seller was living in the basement apartment. She refused to leave and we refused to close until the seller got it sorted out. The seller’s bank ended up paying her a sum of $7K to vacate and drop the issue. It took an extra 4 months from when we submitted an offer to close, but it was well worth not having to deal with that nightmare.

  • Please please look into this carefully. My neighbor bought a tenanted house and it took him A YEAR to get the tenant out. She produced a piece of a lease (like page 2 of a 3 page lease) and that was enough. He was in and out of courts/DC offices and had to do ridiculous things like prove she wasn’t in the military. It was a nightmare and he had a year of mortgage payments for a property he could not occupy.

  • 90 days notice. Or the old “keys for cash,” meaning they move out, give you keys, and you in-turn pay them a nice chunk of change.

  • You cannot force them out if they have a lease; you have to let the lease run until the end. You can evict them and take occupancy after their lease ends (otherwise it would automatically convert to month-to-month with right of renewal). You can, however, offer them a couple thousand to break the lease and move. But if you do, get a lawyer to draft it, and get it in writing.

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