Dealing with Tenants During a Purchase Transaction
This post is Virginia specific, because laws governing tenants in DC and MD are very different.
When you’re looking at properties that are tenant occupied, you’ll have to keep a few things in mind:
1) Tenants have the right to say there through the end of their lease, whether you buy it before then or not.
2) If you close prior to the end of their lease, make sure their security deposit is transferred or credited to you at the time of closing, since you’ll be on the hook to return it as their new landlord.
3) If you’re using an FHA loan to purchase the property, you must move in to the property within 60 days from closing or else you’ll be committing loan fraud (FHA loans are for owner occupied properties).
4) If you specify the property must be vacant at the time of closing and the tenants have not moved out at that time, you will likely have a delayed closing until the seller/landlord can get the tenants out and you’ve had another opportunity to walk the property to make sure no damage has been done.
5) If you’re buying the property as an investment and you’re inheriting tenants, make sure you get copies of their current leases and their security deposits.