Tenants living in the property is not as easy as the close of escrow! Tenants have "Tenants Rights" and those right must be observed. You would hope that the homeowner (especially with a short sale) would have already updated their tenants on what is going on and how much time they have. It is especially important that the agent make sure that the tenants have been advised in the proper way - according to the state's laws. If this is done in the proper way... it could cause some serious "after closing problems" that I am sure neither the agent, the seller and especially the buyer will want to deal with.
If applicable, an addendum to the contract should state that the buyer takes the property subject
to the rights of existing tenants. The contract can help ensure that the rental situation undergoes
a smooth transition by requiring that:
• the seller, within a stated period of time, give the buyer copies of the rental
agreement/lease, the current income and expense statement, and any notices sent to the tenants;
• the seller cannot make any changes to the rental agreement/lease without the
• the seller must give the buyer written statements from the tenants confirming the salient
aspects of the tenancy and that no defaults exist; and
• the seller must transfer to the buyer, through escrow, any unused tenant deposits.