Buying an AirBnB home that is Rented Before Closing

Hello my fellow enthusiasts,

short story: My wife and I have gone under contract on a new (used) home recently and wanted 30 day possession. Part of their counter offer negotiated that possession won’t be until August 1st (real time). We are scheduled to close on the home on ~July 12. That’s understandable as everyone’s situation is different, however, after a bit of sleuthing around for due diligence we discovered that the home is being rented as an AirBnB through the month of July (acccording to the available booking on the site). I can only imagine the reason we can’t take immediate possession is because they are booked until August 1st-ish. We did a walk through and inspection, no one is long term living there unless it’s the maid living out of their car in the driveway between rentals..

Perspective: So we closed on my home today, and we have a negotiated 30 days after closing to vacate, which is fine. After the closing on our home today: the new owners paid us for the house, and they are now paying insurance on my house that I’m living in (strange feeling I’m not quite right with yet..).

We have a place to go, our 30 days post closing was mostly just to buy us some extra time to move things around and keep us from renting a place while our house was on market.

So for my purchase, my question is..or questions are.. at the time of closing on July 12th, I am technically the owner of the home, no? (I.e. I paid for it, I’m paying insurance in it), however I don’t have possession. My buyers can’t change the locks on me just like I can’t go change the locks in my new place after July 12th. But Can they legally short term rent the home for profit between July 12 and Aug 1? Property damages aside, what about liability? Is AirBnB cover that? How can they rent a home out that they don’t technically own? Or do they technically own it?

I hope this makes sense. I’ve dried my thumbs trying to google search my way through this one, every search returns an investor trying to re-rent a current rental. and before I start a Reddit or something, I’m already a member here, and, I trust half of the member feedback here.. unless it’s a tire size thread..

Cheers

 

If the rental was stipulated in the contract you may have to wait. But Your realtor and Airbnb need to talk about it… the hosts will probably try to walk away with the security and cleaning fee and you’ll be doing the cleanup! Better check in on the guests as well- it may end up becoming a party house.

 

Seems like you shouldn’t have closed on it until after August 1st

 

it wasn’t stipulated in the contact, occupancy was, not an AirBnb rental. We’ve talked about it with the realtor, she seems to think it may be legal. I trust her but honestly we are all not sure at the moment. Still trying to work through it. We obviously haven’t closed yet. Thinking about calling up AirBnb customer service on the whole thing.

I feel the same way, however we didn’t realize at the time of writing our offer it was a short term rental.

 

What happens if your renters trash the place?

 

They should provide funds back at closing for the time it is inhabited by the previous owner.

You have legal ownership at closing, if the house is occupied after August 1 you can evict them.

If you’re worried about any damage or lack of cleaning add an addendum to the contract that the property walk through on the 12th is the same condition as their move out date, ie have a condition report that has to be agreed to, and a value of possible damages assigned. Kind of like a deposit. This will allow the closing agent hold back money for cleaning and damages until Aug 2 when a condition report is reviewed.

 

Then I‘m stuck cleaning it. But is it really worth breaking the deal for??

 

Thanks for the feedback. I didn’t think about and addendum. We tried to make the offer look as clean as possibly to beat competition. We currently have no deposit or rental (renal meaning they would pay me rent after Aug 1) in the current contract.

Like I said, it wasn’t disclosed to us before purchasing, our realtor didn’t know either. We thought it was vacant and just staged.

 

Has the makings of a cf of mongolian proportions. I would’ve hired a real estate lawyer for a deal like this and it might not be too late?

Damage post rental is a concern. Did you get the right to inspect post last renter? Who pays for any damage?

Hopefully there’s no further rentals on the books you haven’t been told about.

Re: when you take possession, that’s according to the contract you signed. If you don’t understand everything that’s stipulated, definitely pay for a lawyer to go through it with you. Despite your trust in your realtor, they’re a realtor and can’t offer legal advice.

 

Yes, there is a final walk through. I’m not sure I don’t understand anything in the contract. It’s mostly canned language. I’ll definitely be reading it again. No I don’t believe anything is too late, we are under contact, not closed on the home. worst case worse we lose our earnest money deposit.

 

Call Airbnb. Tell them the property is no longer available and the lessees are out of luck. This is airbnbs problem. Unless you want the Airbnb revenue. As a “tenant “ I’d rather learn this with 10 days to figure it out.

 

What if those guests become squatters? I'd pitch a tent in the backyard, and tell the guests you are camping in your yard.

 

no I don’t want the retinue, would be nice but makes it more sticky. I’ll give them a call and see what they say.. that is if I can get ahold of someone useful. Maybe it’s in the Airbnb terms and conditions?

thought about the tent, changing the lovks, just showing up.. as Tank mentioned, I need to read the fine print here. What is considered “occupancy”

I am not trying to tarnsh this deal too much, we really love this place.

 

Air BnB can cancel rentals at any time for any (or no) reason. I know this from personal experience. We were in route to our destination, had made reservations 6 months prior, confirmed them the day before. Get 2/3 of the way there, my wife gets a text... "Reservation cancelled".
We had stayed at this place before, in a different unit. Building owner apparently found out apartment renters were selling their units on AirBnB and didn't like it. Why did we not get told this in the 6 months since the reservations were made????

 

I’d be as thorough as I could be. Make sure all plumbing is functional, other major systems. Any damage noted should be on the sellers dime to repair.

 

I agree 100%. And the hopes are that there are no issues. I just can’t believe it’s legal to rent a property on AirBnB that they don’t own.. I called AirBnB and they were only helpful at repeating everything I told them, said they would call me back but I’m doubting it. I can imagine the terms and conditions on Airbnb are an easy read..

I don’t feel like this requires me to hire a lawyer..yet. Maybe if the house gets f***ed up or something post closing..

 

Call AirBnB again and tell them you are the owner of the property and you do not wish it to be rented out. It is their responsibility to cancel any reservations made after whatever date you tell them. When ours was canceled, it was canceled by Airbnb. Not the building owner, and not the person we actually rented from. We were 180 miles from our destination in a 600 mile trip. We got no compensation from Airbnb or the owner or anyone else. We were just left without accommodations. So they can do it you just have to be firm.

 

I you don't go to a lawyer who regularly practices real estate law in the state (and even the city) where this property is located then your judgement is questionable. Reliance upon Reddit or TW legal eagles? ... Well, it is your money.
Post closing? Wow!

PS: Everyone here is, no doubt, well intentioned. Legal opinions given on an internet forum ought to come with a disclosure. Here's mine. I am a lawyer, I have practiced real estate law. I am not licensed to practice law in Michigan, I know absolutely nothing at all about Michigan law. This post is not intended to give legal advice and may not be used as such. This post does not initiate, institute or constitute an attorney/client relationship. Nor is this post a solicitation to enter into such a relationship.

 

Yeah... and if the people that are staying there through Airbnb start a fire in the kitchen while cooking something.. who's the big loser?

 

^Like Des2009 said just as I was posting this…Another concern is will your homeowners insurance cover damages from commercial use by others of your property? Or can you be held liable if there’s an accident?

I doubt it is a blanket policy to cover Airbnb’s clients who are using your property for commercial purposes. I am sure AirBnB does not like having someone lease out property that is not theirs without the owners permission…

there was a vacant House near us that was shuttered by the city due to people using it commercially as a party house. They had bands and charged a head fee, and it went on for months until there was an accident and the city shut it down. Hopefully you don’t have any issues like that!