Legal Question in Real Estate Law in California

We are trying to buy a short sale property in northern CA. The seller has tenants in the house who have been turned down by the bank (they had first rights to buy house). We then entered into contract with seller to buy house and were told tenants had month to month lease and were given 60 days notice to vacate the property. Shortly thereafter, we were told there was a long term lease with the seller and they weren't leaving the house. We hired an attorney who is working on the case and have a copy of the month to month and "long term" leases. The long term one is not dated by the signatures, does not include a start date, does not mention that this replaces the month to month one and changed to 1 1/2 year lease among other things. Such a sham.
It gets even more complicated & I don't need to go into it, but my basic question is: which lease would be valid? Do the 2 conflicting leases negate one another? I know you can't have 2 leases for the same property. Any insight is appreciated.

Asked on 3/02/11, 2:35 pm

2 Answers from Attorneys

Bryan Whipple Bryan R. R. Whipple, Attorney at Law

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If you have retained a lawyer, are you dissatisfied with his/her answers to your questions?

If there are no further clues to the history of the lease, I'd guess that a court would assume it replaced the month-to-month arrangement, rather than vice-versa. There could be two reasons. First, someone with a long-term lease would not need to execute a month-to-month agreement because a lease turns into a month-to-month rental more or less automatically, when the tenant doesn't move out and continues to pay rent, and the landlord continues to accept the rent without objection. Second, the court would probably conclude that the lease was made to thwart the sale.

There could be one or more reasons for the seller having a change of mind. One situation I've encountered recently is a property with two co-owners who can't agree what to do -- one wanting to partition the property, the other to continue to own and rent. More often, the owner has received, or expects to receive, a better offer.

Short sale agreements are very non-standard and vary substantially from one situation to the next, and involve more parties than the ordinary sale transaction. Therefore, it is hard to say when one is realy final and ready to be enforced in court by specific performance or otherwise. The parties all have to remain willing to close right up until a closing occurs, pretty much; the agreements tend to have too many "escape clauses."

Answered on 3/02/11, 4:02 pm

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