Late disclosure on a purchase

Looking for some input from the team. I signed docs today on my purchase. A few hours later the title company called me and said they had to redo the settlement docs as the seller told them a tenant in the property had said they were moving out at the end of the month and didnt pay this month’s rent. This caught me by surprise that it wasn’t disclosed earlier. I asked for documentation that the tenant is indeed moving out but they have no documentation and claimed the tenant requested the move out over text. This whole things seems a little screwy to me.

What are my options here? I have already lifted all contingencies. I told the escrow officer to hold off on closing escrow and trying to get the agent and seller to get me some kind of documentation so that i know if the tenant is indeed just moving out and playing fast and loose or if it’s an eviction that I am walking into. If I want to break contract is this a valid reason to break contract?


The tenant is probably just worried that he won’t get his security deposit from you after the sale. The deposit should get transferred to you as a credit to your purchase price. Because of his worry, the tenant didn’t pay last month’s rent and (most likely in violation of the rental agreement) uses the deposit as rent.

This DOES weaken your position as now you have no deposit to cover tenant damages. And what if he is not out on 6/30/17.

This is one of the reasons why tenant occupied houses sell lower… 10%

Hope you got a good deal.

I wouldn’t cancel the transaction over this. Make sure that you have the full tenant’s docs including his rental application with social security #. If he is not out on 7/1/, the SS# gives you a bit more leverage.


Is there any way to force a signed agreement among Seller & Tenant & Buyer stating that Tenant move out by 07/01/2017?

I am sure it is possible to sign such a paper but it is just paper. Having the seller cover the lost security deposit would be better.


If you had mentioned it before, my bad, but is this property by chance in a rent control jurisdiction? It probably doesn’t matter since he/she didn’t pay their rent, but it still sounds like you may have to evict this tenant and that will be more costly (money-wise and time-wise) than just some security deposit. Worst case scenario of course. To me, looks fishy regarding the termination notice was done via text message. Who does that? Who or what owner would forget that the rent wasn’t paid too? Geez, yeah, hopefully you got the property at a good price to make up for this mess. Hopefully it is nothing major…

It’s not in a rent control area. So the only pain would be a messy eviction if it gets to that. But I might have run a different calculus or required a discount if I knew there was going to be an eviction in the picture

Does the contract specify delivery vacant?

It does not. It’s supposed to have a tenant in the unit

Disclosure is something given to the buyer by the seller documenting their knowledge of the property. It is not the same thing as an independent inspection by a third party. An examination may reveal defects that the seller may not have been aware of.

The buyer should always do a full property inspection, before moving forward with the purchase. The inspector checks all systems and components from the roof to the basement. Often, in the interest of the ultimate in full disclosure, a seller hires a property inspector before going on the market and supplies the written report to the buyer.