Post # 1
I am strongly considering buying a home that is currently leased. I have no problem letting the leasee going to the end of their lease which is the beginning of October- if I don’t I’ll have to see if I can buy them out of their lease and if they don’t want to be bought out they don’t have to.
The problem lies with the fact that my loan is for owner occupancy and I have to occupy in 30-60 days. At the latest this would be August 10th…and that’s with stretching things.
So here’s my thing- I really want this house, I can’t legally make the tenants leave (and personally I don’t mind if they don’t), and I don’t want to commit mortgage fraud…thoughts?
If I tell my broker that I have every intention of living there in time- which I do- but the tenant doesn’t want to leave would I be committing mortgage fraud? I will definitely be living there in October- no question, only a month and a half after when I would suppose to be living there.
Post # 2
accorn: If you are renting the house when your mortgage becomes effective, and it is specifically for an owner occupied home, then yes, you are committing fraud. You might get away with it, but I certainly would check out the consequences of lying. eg. would your insurance be valid if there were a fire?
Check the landlord tenant act legislation where you live. Normally there are provisions for giving a tenant notice before the end of their lease. You might have to pay their moving expenses for example.
Post # 3
Could you put in an offer but specify the closing be no more than 60 days from the end of the lease? If the home is rented the current owners might not mind being able to collect rent for another few months.
Post # 4
kl1987: I could see, but that wouldn’t be til August- and if they want out of the renting game that is a while from now. And the market is ridiculous right now, if they wait a little bit they’ll def get another offer that maybe is an invester and doesn’t have to worry about that.
Post # 5
I would consider providing the renters with incentive to leave. A friend of mine was the renter in a similar situation and the owner (seller) of the property offered him his last three months (until possession date) free in exchange for getting out early. You could see if they would be willing to move if you take over their first month’s rent (or two?). Or see if the seller would be willing to offer it, and then roll that cost into the purchase price of the house? It sounds like they’re likely out in October either way, so if I were them, I’d definitely move early if I were offered money to do it. And telling them now gives them lots of heads up to look for a new place (ie. if you set an August 1 possession date)
Post # 6
starbuckslover: Yeah, that’s what I think we will end up doing. It just seems silly because it sounds like typically you just have to sign an agreement that you will live there for a year and then if you want to rent it out it’s fine, but if we have a renter for 45 extra days it’s a problem even if we intend to live there for 10 years…