When a property is purchased and the previous owner doesn’t move out

Purchasing a new property can be exhilarating, especially for first-time homebuyers who have just realized the American Dream. Yet nothing can be more dampening than come move-in day, the new owner discovers that the previous owner or perhaps a relative is still residing there. When asked why they are still there, the previous owner might say they haven’t found a new place to live or that they need more time to move their belongings.

The new owner is furious and says, “What do you mean you can’t find a new place to go? Get out of my house.” The reality is they will have to go through the carefully choreographed steps of the eviction process, beginning with a 3-day Notice to Quit giving them three days to vacate and proceed forward with an eviction if the previous owner or their son or daughter stays implanted.

Please don’t make the mistake of doing a leaseback. 

The previous owner may plead with the new owner to give them extra time to stay in the property and is willing to pay for it. As a hypothetical, they say they need 60 days to transition out of the property, and while the new owner’s mortgage is $5,000, the previous owner is willing to pay $8,000. Resist the temptation to take this deal.

Why? A landlord-tenant relationship is created and the previous owner now has a set of tenant rights. Believe us, the new owner does not want to deal with this morass.

We know that many kind-hearted people who just purchased a property, sympathetic to the last owner who is struggling to find new surroundings, will cave in and allow the previous owner to stay in exchange for rent. What the new owner isn’t aware of is that they are potentially subjecting themselves to a new regulatory regime.

What incoming owners can do is in the terms of the escrow, allow the previous owner to remain in possession of the property and reduce the purchase price to account for this extra time. In this fashion, the previous owner cannot assert they have tenant rights.