Help! Tenant Won’t Cooperate with the Sale of the Home or Seller Didn’t Leave
Help! Tenant Won’t Cooperate with the Sale of the Home or Seller Didn’t Leave
By: Tanner N. Puryear, Esq. and D. Keith Dunnagan, Esq.
May 4, 2021
Over the last month, we have been addressing the issue of selling tenanted properties and the impacts of the eviction moratoriums. It is no secret the market is very hot right now and landlords are trying to figure out to sell the tenanted investment properties. The statewide eviction moratorium has made things particularly difficult in regard to selling tenant-occupied properties. While there seems to be no difficulty in securing buyers, the problem lies in closing out the transaction, particularly if financing is dependent on the buyer occupying the property. If you are dealing with a difficult tenant, you will likely run into issues closing out escrow, which may cause exposure to liquidated damages, penalties, etc.
Further complicating matters is the fact that you can only evict a tenant during this “protected period” for “just cause.” The sale of the tenant-occupied property is a legal basis for eviction provided certain conditions are met. For example, the buyer of the tenant-occupied property must intend on occupying the property themselves. If the buyer is a real estate investment trust, a corporation, or an LLC in which at least one member is a corporation, there will be no basis for eviction until the state of emergency is over. (CCP 1179.03.5) What happens if the tenant does not cooperate with the sale of the property? How do we handle situations where the seller remains in possession after the close and won’t vacate? These are a couple of the issues we will look at today.
NOTICES REQUIRED WHEN SELLING A TENANT-OCCUPIED PROPERTY
“If the purpose of the entry is to exhibit the dwelling unit to prospective or actual purchasers, the notice may be given orally, in person or by telephone, if the landlord or his or her agent has notified the tenant in writing within 120 days of the oral notice that the property is for sale and that the landlord or agent may contact the tenant orally for the purpose described above. Twenty-four hours is presumed reasonable notice in the absence of evidence to the contrary…”
As the law states, once the written 120-day notice has been provided to the tenant, you can simply give an oral notice that you will be entering the property to exhibit it for sale, as long as the notice period is at least 24 hours.
It is important to note that you cannot give the tenant notice to vacate until you have entered a contract for sale. Once the contract has been executed, you must give the tenant a 30-day notice to vacate pursuant to Civil Code 1946.1(d)(2). Keep in mind that the buyer must intend on occupying the property for at least a year, and the notice must be given no more than 120 days after escrow has been established.
WHAT DO YOU DO IF A TENANT REFUSES TO COOPERATE?
If a tenant is not cooperating with showings or inspections your only option moving forward is to serve the tenants with a “three-day notice to perform covenant or quit.” Pursuant to Civil Code section 1946.2(b)(1)(H) “the tenants refusal to allow the owner to enter the residential property” is just cause for eviction. If the tenant is allowing access but refusing to keep the property in a clean and orderly condition, check the lease. More often than not the lease will include a provision that obligates the tenant to keep the property in a “clean and sanitary condition.” Therefore if the tenant is refusing to keep the property in a sanitary condition you can serve them with a three day notice to perform covenant or quit. Pursuant to civil code section 1946.2(b)(1)(B), breach of a material term of the lease is “just cause” for eviction.
RENT BACK
Rent backs may create unnecessary headaches during the state of emergency. If the seller simply signs the “Seller License to Remain in Possession Addendum” (‘SIP”), you can move forward with eviction should the seller refuse to vacate the premise. Further under 1946.2(b)(1)(K), should the tenant fail to vacate after providing written notice of the intent to terminate the tenancy, the law allows for an eviction. The main thing, make sure you have the correct language in the documents.
However, if the seller stays longer than twenty-nine days, (they’ve executed the “Residential lease After Sale” form) then they will be tenants subject to the COVID protections and the buyer will now need just cause to evict them.
The information presented in this article is not to be taken as legal advice. Every situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.
Recent and Popular Articles From Our Blog:
- March 30 – The CARES Act Stimulus Package Guidance
- April 23 – Pending Legislation in the Wake of COVID-19
- April 28 – A New Reality – Temporary or Permanent – Virtual Showings and Disclosures
- May 12 – Executive Order Creates Worker’s Comp Liability for Small Business
- May 18 – Planning for Bankruptcy
- May 22 – Servant Leadership
- June 8 – Paycheck Protection Program Flexibility Act is Enacted
- June 10 – Impact to Credit Score After Filing Chapter 7 Bankruptcy
- June 26 – SBA Rolls Out Updated PPP Loan Forgiveness Application
- July 2 – Understanding the Home Equity Sales Contract Act 2020
- July 14 – Governor Rolls Back Re-Opening
- August 4 – August 2020 COVID-19 Update
- August 18 – Status Of Selected California State Operations re: COVID-19
- September 1 – COVID Update on Foreclosures and Evictions
- September 3 – State Passes AB 3088
- September 15 – Update on PPP Forgiveness and Impacts
- November 10 – Changes to the Fair Housing and Discrimination Advisory CAR Form
- November 24 – In a Season of Difficulty – We Choose Gratitude
- December 15 – Cal/OSHA Issues New COVID Prevention Rule
- January 5 – Introduction to New Laws 2021
- January 26- Rain and the Prevalence of Failure to Disclose Claims
Help! Tenant Won’t Cooperate with the Sale of the Home or Seller Didn’t Leave
By: Tanner N. Puryear, Esq. and D. Keith Dunnagan, Esq.
May 4, 2021
Over the last month, we have been addressing the issue of selling tenanted properties and the impacts of the eviction moratoriums. It is no secret the market is very hot right now and landlords are trying to figure out to sell the tenanted investment properties. The statewide eviction moratorium has made things particularly difficult in regard to selling tenant-occupied properties. While there seems to be no difficulty in securing buyers, the problem lies in closing out the transaction, particularly if financing is dependent on the buyer occupying the property. If you are dealing with a difficult tenant, you will likely run into issues closing out escrow, which may cause exposure to liquidated damages, penalties, etc.
Further complicating matters is the fact that you can only evict a tenant during this “protected period” for “just cause.” The sale of the tenant-occupied property is a legal basis for eviction provided certain conditions are met. For example, the buyer of the tenant-occupied property must intend on occupying the property themselves. If the buyer is a real estate investment trust, a corporation, or an LLC in which at least one member is a corporation, there will be no basis for eviction until the state of emergency is over. (CCP 1179.03.5) What happens if the tenant does not cooperate with the sale of the property? How do we handle situations where the seller remains in possession after the close and won’t vacate? These are a couple of the issues we will look at today.
NOTICES REQUIRED WHEN SELLING A TENANT-OCCUPIED PROPERTY
“If the purpose of the entry is to exhibit the dwelling unit to prospective or actual purchasers, the notice may be given orally, in person or by telephone, if the landlord or his or her agent has notified the tenant in writing within 120 days of the oral notice that the property is for sale and that the landlord or agent may contact the tenant orally for the purpose described above. Twenty-four hours is presumed reasonable notice in the absence of evidence to the contrary…”
As the law states, once the written 120-day notice has been provided to the tenant, you can simply give an oral notice that you will be entering the property to exhibit it for sale, as long as the notice period is at least 24 hours.
It is important to note that you cannot give the tenant notice to vacate until you have entered a contract for sale. Once the contract has been executed, you must give the tenant a 30-day notice to vacate pursuant to Civil Code 1946.1(d)(2). Keep in mind that the buyer must intend on occupying the property for at least a year, and the notice must be given no more than 120 days after escrow has been established.
WHAT DO YOU DO IF A TENANT REFUSES TO COOPERATE?
If a tenant is not cooperating with showings or inspections your only option moving forward is to serve the tenants with a “three-day notice to perform covenant or quit.” Pursuant to Civil Code section 1946.2(b)(1)(H) “the tenants refusal to allow the owner to enter the residential property” is just cause for eviction. If the tenant is allowing access but refusing to keep the property in a clean and orderly condition, check the lease. More often than not the lease will include a provision that obligates the tenant to keep the property in a “clean and sanitary condition.” Therefore if the tenant is refusing to keep the property in a sanitary condition you can serve them with a three day notice to perform covenant or quit. Pursuant to civil code section 1946.2(b)(1)(B), breach of a material term of the lease is “just cause” for eviction.
RENT BACK
Rent backs may create unnecessary headaches during the state of emergency. If the seller simply signs the “Seller License to Remain in Possession Addendum” (‘SIP”), you can move forward with eviction should the seller refuse to vacate the premise. Further under 1946.2(b)(1)(K), should the tenant fail to vacate after providing written notice of the intent to terminate the tenancy, the law allows for an eviction. The main thing, make sure you have the correct language in the documents.
However, if the seller stays longer than twenty-nine days, (they’ve executed the “Residential lease After Sale” form) then they will be tenants subject to the COVID protections and the buyer will now need just cause to evict them.
The information presented in this article is not to be taken as legal advice. Every situation is different. If you are facing a legal issue of any kind, get competent legal advice in your state immediately so that you can determine your best options.
Recent and Popular Articles From Our Blog:
- March 30 – The CARES Act Stimulus Package Guidance
- April 23 – Pending Legislation in the Wake of COVID-19
- April 28 – A New Reality – Temporary or Permanent – Virtual Showings and Disclosures
- May 12 – Executive Order Creates Worker’s Comp Liability for Small Business
- May 18 – Planning for Bankruptcy
- May 22 – Servant Leadership
- June 8 – Paycheck Protection Program Flexibility Act is Enacted
- June 10 – Impact to Credit Score After Filing Chapter 7 Bankruptcy
- June 26 – SBA Rolls Out Updated PPP Loan Forgiveness Application
- July 2 – Understanding the Home Equity Sales Contract Act 2020
- July 14 – Governor Rolls Back Re-Opening
- August 4 – August 2020 COVID-19 Update
- August 18 – Status Of Selected California State Operations re: COVID-19
- September 1 – COVID Update on Foreclosures and Evictions
- September 3 – State Passes AB 3088
- September 15 – Update on PPP Forgiveness and Impacts
- November 10 – Changes to the Fair Housing and Discrimination Advisory CAR Form
- November 24 – In a Season of Difficulty – We Choose Gratitude
- December 15 – Cal/OSHA Issues New COVID Prevention Rule
- January 5 – Introduction to New Laws 2021
- January 26- Rain and the Prevalence of Failure to Disclose Claims