View Full Version : Buying a house with an existing tenant
09-03-2006, 16:16 PM
I have found a property which is the right type/right location that I've been looking for.
However - it has been on the mkt for 3 - 4 months which is unusual in this area and the estate agent says the owner has been letting the house out to his parents for the past 2/3 years. The want to go onto the council housing list but have been told they cannot do this until a buyer has been found for the house.
The price has just been reduced which is making it v attractive.
The agent has said it is definitely vacant possession - but how can this be guaranteed?
Am I mad to consider viewing this property?
09-03-2006, 18:46 PM
The agent has said it is definitely vacant possession - but how can this be guaranteed?Perfectly simple - you will agree a purchase price with the vendor for vacant possession, and you won't pay him any money until the tenants are out. Your solicitor won't let you exchange contracts until then. As far as I know (and I'm not a lawyer) your only real risk would be that the tenants end up not leaving, and that you then withdraw from the sale (thereby wasting any money you've spent on valuations, legal and mortgage fees etc).
09-03-2006, 20:13 PM
Unless you can get vacant possession you will only be able to buy this property as a "buy to let".
It may be important to have the details of the tenancy agreement here and if the purchaser requires it for his or her own immediate occupation?
If the property has only been let two/three years it should be an AST but you should check the details as to whether any renewal arrangements have been made and when the current period ends.
There is no guarantee that the current tenants will be rehoused by the Council even if you purchase the property as a buy to let. There might be transactions between the parents and the family that might be regarded as the parents contributing to deliberately making themselves homeless and therefore not qualifying for Council rehousing.
How cheap is the property in comparison with the other properties you have seen? What rent is being paid and could you afford to invest as a landlord for a short while and give the tenants transferred to you the appropriate notice to quit. Could you withstand say three to four months of procedures to obtain possession and maybe action to recover rent arrears?
is it worth the grief?
09-03-2006, 21:17 PM
Thanks for your replies folks.
When the estate agent phoned back with a viewing appt - she told me that the tenants have managed to secure temporary alternative housing so they can vacate as soon as a sale goes through.
The price is only a little lower than usual but it is a really good location and I reckon with vacant possession being (hopefully) straightforward - it will sell really quickly.
It sounds promising but I will bear in mind all the advice.
Thanks again, it's brilliant to have a place to ask such questions and get honest, unbiaised answers.
09-03-2006, 21:48 PM
As everyone else has said, it shouldn't be a problem. The term vacant possession must appear in the contract of sale. Provided it does, then it is the vendor's problem to get the tenants out and if they cannot by the time of completion then they must offer to refund your deposit because they cannot complete. You can also consider taking legal action for a refund of your expenses (surveyor, search & solicitor's fees e.t.c.) because the vendor has not completed a binding sale contract on time.
Go for it!
10-03-2006, 06:07 AM
I had in mind the concerns about the potential losses to the purchaser as set out in ErictheLobster's post.
Glad to read the last post that if vacant possession is in the contract and is not complied with by the vendor then all out of pocket expenses of the thwarted purchaser must be met.
I'm not sure what the situation would be if there are problems with rehousing and the vendor keeps delays signing the contract forcing the purchaser to withdraw from the sale.
Might it be possible for a preliminary written agreement along the lines that subject to satisfactory title and confirmation of vacant possession etc the purchaser wishes to exchange contracts by a specified date and the vendor will be in a position to give vacant possession on the completion date?
Go for it!!!!!!!!
10-03-2006, 09:04 AM
Some misleading guidance in the posts in this thread!
Vendor and buyer are only bound when the contract for sale is signed and exchanged - not before. The contract should state vacant possession - if contracts are signed and exchanged and the vendor fails to remove the tenants then the vendor is liable to compensate the buyer. A solicitor WILL let contracts be exchanged with the tenants still in situ as clauses in the standard contract will lay down what will happen if the sale is unable to be completed.
If the matter goes up to, but not including exchange of contracts, then either party can withdraw for any reason without liability to the other - this is the time when survey fees and some solicitors fees for searches and other work is completely wasted and is partly why home information packs are being introduced. Buyers often withdraw because of something found out during land searches or surveys which they dont like, and sellers often withdraw because they got a better offer!
In this particular case of this thread - the solicitor will exchange contracts in due course but will not allow completion until the property is actually empty because "vacant possession" will be an express term of completion.
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