To allow or not to allow a tenant to stay during listing?
scenario: property purchased as primary residence, years later, moved out, has a tenant. tenant pays on time, however the amount doesn't cover mortgage plus condo fees monthly, so homeowner has been paying difference. homeowner now out of work and cannot pay the $600 difference each month. so-if list home as short sale, with tenant still in property who is now month to month, collect normal rent amount, tenant understands situation. homeowner then pays this portion to the mortgage company, although short of actual payment? any one else dealt with short selling a tenant occupied property? just want to make sure landlord handles rent money right. also-any one been able to have a short sale approved in which tenant buys property they rent?
Replies to This Discussion
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Permalink Reply by Katerina Gasset on
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The tenant is a good prospect to buy the short sale. Most lenders actually like this type of deal. But if I were the homeowners I would be saving that money that is short to the bank to offer as part of the buy down of any deficiency- of course, I am not an attorney and I am not giving legal advice:)
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Not all Short Sales have to be arms length. This depends on the lender. There is no law in the state of Florida but lenders most of them have this as a rule. There are exceptions to rules. The buyer's lender is more concerned with arms length than short sale lenders are in our experience.
As long as ALL parties know who is buying the property- you can get approvals for non arms length, especially when the buyer is paying all cash for the property. He does not need an OK from any purchasing lender. Then the short sale lender would be the only one who needs to give an approval on such a transaction. -
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Permalink Reply by Eric M. Boyd on
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The homeowner, in this situation, should contact his/her mortgage company to see about a loan modification. Sending the lender a partial payment will only prolong the issue, in my opinion. Now, if they want to sell, then they just need to set themselves up for the short sale. Now, whether that means collecting rent as long as possible, or just getting the tenant to move out, that's up to the homeowner. I know what I'd do. LOL If the tenant is amicable about it all, then maybe they'll work with the homeowner to get it sold and be very accommodating for showings, etc. And, if the tenant is interested, see if they can qualify. But, don't hold up a listing the property for sale. Proceed as you normally would.
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Permalink Reply by James Lockard on
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I have only had problems with tenants occupying a short sale listing. Twice we had month to month leases and both were not paying the rent once they found out the owner was short selling the proeprty. Twice now we had to go to court to have the tenants evicted. Both times we wound up having to get extensions on the bank acceptance but eventually it all worked out.
I would suggest to get them out ASAP if there is no lease involved. -
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Permalink Reply by Christy Cole on
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thank you everyone for your input.
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