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ey344
27-10-2009, 22:05 PM
Hello All,

I am a prospective new L who is buying a property with existing T and the current AST with 2 months still to run.
My mortgage provider requires a new AST to be created and signed before completion.

The current AST references the letting agent and I will manage the tenancy myself so I'm not sure its detail is relevant.

The T has confirmed that they would be happy to sign a new AST before the end of the current one (as it confirms their stay and rent for another 12 months).

My question is: If signed by myself and the T and dated the day of completion, would our new AST automatically supersede the existing one?

If not, is their a simple way the current L and T can mutually cancel their agreement on the day of completion when our signed AST starts?

I don't want to wait until the existing AST expires to buy the property as I would have to re-apply for the mortgage, would incur stamp duty etc.

Thanks,
E

mind the gap
27-10-2009, 22:18 PM
The new AST would supercede the old one, but the agent might demand his commission for the time left to run on the old one. However, since the agent's contract is surely with the current LL and not with you, I do not see how the agent can continue to demand his 'cut' (as some agents' contracts do) if the property changes hands.

Does anyone know?

PaulF
28-10-2009, 07:40 AM
Your'e right. The current agent would need a new TOB with the new landlord/owner and as he doesn't want to appoint them then they would be unable to claim any payments from him. They also wouldn't be able to claim commission from the present owner for 'management' duties they were not able to carry out due to the sale.

Lawcruncher
28-10-2009, 08:58 AM
My question is: If signed by myself and the T and dated on the day of completion, would our new AST automatically supersede the existing one?

If the word in red is inserted, yes. (Post-dating or back-dating documents is not a habit anyone should get into.)

Where there is a tenancy with landlord A and tenant B and A grants a new tenancy to B, the new tenancy takes effect and the old one is deemed to have been surrendered by operation of law.

mind the gap
28-10-2009, 08:59 AM
Spelling : the Moderator is obviously more awake than I was last night when I wrote 'supercede'. Apologies! :) Odd that it was changed in OP's header and post but not in mine...! Or perhaps it's paranoia.

dominic
28-10-2009, 09:49 AM
The simple solution is to make sure the new AST expressly terminates the existing term under the current AST on the day before the new term is to begin.

Despite Paul f's comments, as new LL to the property there is no contractual relationship between you and the existing LL's agent. Do not pay him anything or be bullied into signing a new agreement with him. You can lawfully say "no", and pay him nothing. His contract with the existing LL is between him and that LL, he has no rights against you. Just make sure the T pays the rent directly to you, and make sure the existing LL hands over T's deposit (or an amount equivalent to T's deposit) to you as a condition of sale. Your conveyancer should be drafting this into the contract of sale.

jeffrey
28-10-2009, 11:43 AM
Chronology problem:
1. V sells to P. P mortgages to B.
2. When does P re-let to T?
3. It can't be before step 1 (because P is not owner until then).
4. But B requires the re-let to be before completion (i.e. before step 1)!
5. So it has to be after step 1. How will P know for sure that T will execute it? If T changes mind and refuses so to do, P is lumbered with the 'old' Letting- a breach of B's requirements.

dominic
28-10-2009, 12:25 PM
In practice there is no problem in "chronology" due to the escrow arrangements which will be put in place. T and P will sign (but not date) the AST and provide it to P's (and B's) solicitor to T and P's order pending completion of the sale, at which time all agreements (including the AST) become effective.

P's solicitor will have to provide comfort (an undertaking) to T that the AST will not be effective (and torn up and binned) in the event completion does not occur and the sale is aborted.

mind the gap
28-10-2009, 12:26 PM
In practice there is no problem in "chronology" due to the escrow arrangements which will be put in place. T and P will sign (but not date) the AST and provide it to P's (and B's) solicitor to T and P's order pending completion of the sale, at which time all agreements (including the AST) become effective.

P's solicitor will have to provide comfort (an undertaking) to T that the AST will not be effective (and torn up and binned) in the event completion does not occur and the sale is aborted.

Escrow. Comfort. What lovely words :)

Do you know any more? I collect 'em!

ey344
28-10-2009, 14:01 PM
Thanks all for your replies.

I will ask the new AST to expressly terminate the terms of the current AST on the day of completion.
I've spoken with the current LL's agent and they will not expect any contract / fees from me.

Should I be disappointed that my solicitor has not discussed this with me, and written it in to the draft document already?
He's told me an extra charge will be applicable for changing the AST again as he's already changed it once due to my giving him a misspelled name the first time.

Thanks again.