Couple Buys Home But Seller Refuses To Move Out (Don’t Let This Happen To You!)

Buying your dream home should be an amazing experience. You’ve probably saved up all of your money, and you think you’re finally going to move into the house you’ve always wanted.

But in the case of one couple, buying their Riverside dream home became a nightmare. After paying the seller, the couple found themselves unable to move in because the seller wouldn’t leave!

The seller was now being a pain to the home buyers and placed them in a difficult situation. Due to the eviction moratorium in California, the couple didn’t even have the means to evict the seller.

This highly unethical practice isn’t unheard of. So for first-time home buyers worried about the same thing happening to them, don’t worry because there are things you can do to prevent this from happening.

What Happened?

This situation happened back in January 2020, before the COVID-19 pandemic exploded. At that time, the seller wanted to sell his home very quickly. He wanted it sold in 2 weeks!

Now, it’s not impossible to close in that short of a time frame. In fact, as a hard money lender, we’ve seen this happen and have been able to approve a loan in that short amount of time.

This seller approached a real estate agent to help him. He was willing to sell his house below market value. But with what the seller wants, the agent knew he’d have to find a cash buyer. Enter the couple.

The couple readily went ahead to buy this off market deal and came up with the $550,000 cash to close on it. After escrow, the seller asked for some time to find a new place to live, which the couple agreed to. But then, he just took advantage and decided not to leave.

By March 2020, COVID was spreading and an eviction moratorium was put in place. Landlords can no longer evict people unless tenants are doing something dangerous. Because of this, there was no motivation from the seller to move.

The couple’s hands were tied. They couldn’t evict him, and the seller had already been paid. They were still renting a place at that time and were quickly running out of money.

What made it even worse, the seller refuses to let the home be maintained. When they tried to water the plants, he went out and pulled out all the sprinklers!

When I read about this in the news, it made me so mad. I felt really bad for this couple who were first-time home buyers. So to help other people, I’d like to share my tips for preventing this from happening to them.

How To Make Sure This Doesn’t Happen To You

1. Write in rent increases if they don’t move out

In the contract, make sure to write that if they don’t move out after a certain length of time, you could increase rents to insane levels.

For example, if they are given 60 days to leave, after the 60 days are up, you will increase rent to $10,000 a month. With typical rents in the Bay Area at $3,000-4,000 a month, they’ll be highly motivated to leave on time.

2. Hold back funds in escrow

Don’t release all of the funds until the seller leaves. You can tell the escrow company to release hold back $50,000.

If the seller hasn’t moved out after the time period you agreed on, you can then have the $10,000 rent back drawn from the $50,000 still being held by the escrow company.

3. Give them a bonus for moving out earlier

You can also incentivize the seller. Make an offer for $100 a day that they are able to move out earlier. So if they were to move out 10 days earlier, they would get $1,000. That will motivate them to move out sooner.

So first-time home buyers, make sure you have these contingencies in place so that you can protect yourself from an unscrupulous seller.

That seller is obviously no longer paying taxes and insurance on the property. He has no reason to move out since he has the money, and the buyers’ aren’t able to do anything.

But later on, the buyers can decide to sue the seller for all the time they wasted since they know the seller has money now. They’d still have to go through the process, pay money for legal fees, and what not though. It is still better than inheriting a tenant that refused to move out because you know they probably don’t have any money.

Conclusion

Remember, always protect yourself. Write in the contingencies in place. And hopefully, your seller will move out with no drama.

Do you think the seller had the right to squat in his own home? Let me know your thoughts in the comments below.