I purchased a property subject to there being no existing leases on the property in May 2008. The Seller wrote in the contract and on an addendum there were no leases in place. He also stated that the commercial property (a public Laundromat on the first floor), was generating $4200/month for rent. After closing, and upon collecting rent from the commercial tenant, the tenant presented a lease which was allegedly signed by the Seller's mother (who was the previous owner and deeded the property to the Seller in 2006). The lease provided that the tenant had to pay $526/month plus 6% annual increase and that the lease was for 25 years plus an option for a 10 year renewal. However, the same tenant says he was paying $1500/mth to the Seller. I contacted the Seller and he said the lease was fraudulent, but offered no proof that he was in fact receiving $4200/mth from the commercial tenant. Do I have a claim against the Seller for my loss in potential rent even though I've been accepting the $1500/mth from the commercial tenant? If so, how do I calculate my loss?
1 Answer from Attorneys
Who says you have a loss? Legally, you should NEVER have taken a penny from the interloper. The lease was invalid against you because a lease for more than 3 years is not binding on you unless is is recorded like a deed or mortgage. But you accepted rent from the tenant,so guess what? you have a tenant now for below-market rent. You need to update your mortgage lender (if you have one).
Did you have a lawyer on this deal? Was there any due diligence conducted? (Never mind, you waited too long, legal malpractice has a three-year statute of limitations, so that claim is long gone.) If you did not get an assignment of lease for $4200/mth you have essentially a handful of beans, bupkes. Besides which the deal closed five years ago. THere may be a six-year statute of limitations but by waiting five years and collecting rent from the tenant you have waived most if not all your remedies.
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