Laws and practices:
How a Landlord can terminate a tenancy with the tenant under New York laws? Two possible situations:
- There is a written lease. The Landlord cannot terminate the lease prior to the lease expiration date unless Tenant is in default.
- There is no written lease. The landlord has to serve a 30 day advance notice to the tenants.
Story:
Joe is interested in purchasing a 2 family house in Brooklyn. When he entered into the contract, it said that at the closing, the house should be delivered vacant and free of tenants. Unfortunately, the tenant on the second floor does not want to move because the rent is so low and he cannot find another place that he would like to move to. Joe applied for a mortgage and locked in the interest rate for 30 days.
This is a very common situation that many buyers face in New York City. There are tenants in many houses listed for sale. A typical Seller who has a 2-family house will tend to live in one apartment and rent out another. When it comes to coordinating the closing, a buyer has to be cautious if there is a tenant in the house, even though the contract of sale says the house will be delivered vacant. The question is how soon can it be delivered vacant?
Banks have a certain time limit to lock in the interest rate. It is usually 30 days. In Joe’s situation, he either has to pay a rate extension fee to the bank, or cancel the loan application and reapply when the tenant moves out.
The Resolution:
If you are buying a house that has a tenant and the seller is telling you that the tenant will move before the closing, there are three things that you can do to make sure you will not suffer unnecessary loss.
- Do not lock in the interest rate. Tell your loan officer that there is a tenant and don’t lock in the rate until you tell him/her to do so.
- Interview the tenant. If you have the feeling that the tenant is not willing to leave voluntarily, ask the Seller to start the eviction process after the contract is fully executed. In New York City, that process could take up to six months, therefore starting early will save time for the buyer.
- If the seller cannot evict the tenant in time, and you have a pressing reason to close, such as your interest rate will expire, then you can ask the Seller to hold escrow with his attorney, to insure the eviction of the Tenant. This way at least you have an assurance that if Seller does not perform the job, you will hire someone to do so and will be compensated for your loss of rent, and legal fees.
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Jacqueline Huang Huang & Associates, P.C. 6402 8th Avenue, Suite 405 Brooklyn, NY 11220 Telephone: (718) 435-666 Email: jackiehuang@huanglawfirm.com  |
