Tenants And Short Sales
Hello all,
Have a question for the folks out there with lots of experience doing short sales.
I am working with another investor who has gotten himself in quite a jam. He has several houses that he guaranteed the debt on and now they in forclosure. I am getting the short sale package together with for the lender but am not sure how to handle the tenant issue.
Three of the houses have tenants in them, but the seller has not made any payments to the lender for quite a while. How would you recommend I handle this?
If I take the deed on these houses, I don't want to take the income and get accussed of "Equity Skimming", but I don't want to let the tenants live there for free, and I don't want to let the seller have the income. All have leases that have terms for several months yet.
I intend to wholesale these houses if I can get the short sale accepted.
How would you suggest I handle this situation?
Thanks,
Gary
There should be a clause in the mortgage called an assignment of leases. Get an authorization from the property owner to speak with the Lender. Fac this authorization to them and remind them of this clause. Have the tenant's send their rent to the mortgage company. This will reduce the monies owed and make them more favorable to your short sale request.
This way, you are not equity skimming, the bank will get more than just the short sale amount and the owner won't be putting it in his pocket either.
I hope this helps.
Barbara
Barbara,
Thank you for the suggestion. But I'm a little puzzled. This state has a 6 month redemption period. If I have the rents sent to the lender what added incentive does that give them to approve the short sale. Seems like they could continue to collect the rent for the next 6+ months and still get the house at the end of the redemption period. That seems like a lot better position than they are in now because without the rents, if the house goes to sale and they bid to protect their position they will still wait 6 months from the sale date to get the houses. That seems like a better reason to grant the short sale than if they are receiving rents while they wait.
Anyone else have an opinion?
Thanks,
Gary