Landlord selling house; can he terminate tenancy early?

[CharlieLevy]

We recently moved into a new flat, but on the day we went to sign the contract the landlord was made an offer to sell the flat. In the end after much discussion we added the following clause into the contract:

"Should the landlord sell the property within the first 6 months after the effective date of the tenancy, the landlord shall be entitled to terminate the present shorthold tenancy prematurely by giving 3 months advance notice in writing. In this case the landlord shall pay a compensation of £600 to the tenant."

It looks like the sale is moving forwards now and we really like the flat and don't want to move. Have I understood the position correctly that he can only give us our three months notice once he has sold (exchanged contracts) the flat? Or can he give us notice sooner?

Any advice would be very much appreciated.

[pcwilkins]

We recently moved into a new flat, but on the day we went to sign the contract the landlord was made an offer to sell the flat. In the end after much discussion we added the following clause into the contract:

"Should the landlord sell the property within the first 6 months after the effective date of the tenancy, the landlord shall be entitled to terminate the present shorthold tenancy prematurely by giving 3 months advance notice in writing. In this case the landlord shall pay a compensation of £600 to the tenant."

It looks like the sale is moving forwards now and we really like the flat and don't want to move. Have I understood the position correctly that he can only give us our three months notice once he has sold (exchanged contracts) the flat? Or can he give us notice sooner?

Any advice would be very much appreciated.

It depends on what is meant by "should the landlord sell the property...". I would read this to mean that the LL has to actually have completed the sale; otherwise he has not "sold" the property.

Based on that reasoning, he can only serve the notice once he has completed on the sale; but that means you are entitled to live in the property for 3 months after the sale has been completed. Therefore the property would have to be sold with sitting tenants.

I admit that other interpretations could be put on the clause. It could be argued that LL can give notice before completing the sale, and then three months later (once you've moved out) he can complete the sale with vacant possession. However I don't think this is what the clause actually says. To me it says that

"If the LL sells the flat (i.e. if the flat is actually sold and is now not owned by the present LL) then present LL can terminate the agreement by giving three month's notice." But that's a little confusing because if present LL does not own the property, he isn't the LL and your agreement is now with the new owner. So perhaps it means that the new LL (i.e. the new owner) can terminate the agreement by giving 3 month's notice and paying you £600.

I think you are in a strong position; the clause is badly worded. LL would have been better off just including a normal break clause instead saying he can only "end agreement by serving 3 month's notice" once he has "sold the property".

Peter

[CharlieLevy]

Thank you for such a quick reply. You have made me about 80% confident I put the right wording in. Not convinced he will see it that way though.

[jeffrey]

No matter who is L (old or new);
and no matter what the AST states;
no s.21 Notice served on you can lead to a Possession Order operative during the AST's first six months.

[pcwilkins]

No matter who is L (old or new);
and no matter what the AST states;
no s.21 Notice served on you can lead to a Possession Order operative during the AST's first six months.

But is it possible for an AST to be ended within the first six months by virtue of a break clause which doesn't mention S21?

Or is it impossible for LL to end an AST within the first six months, full stop?

Peter

[jeffrey]

But is it possible for an AST to be ended within the first six months by virtue of a break clause which doesn't mention S21?

Or is it impossible for LL to end an AST within the first six months, full stop?

Peter

1. For an AST created after 28 February 197, there is no minimum six-month-term requirement.
2. See s.21(5)(b), inserted by 1996 Act. Possession Order under s.21 cannot take effect in first six months of new tenancy (n/a to renewal tenancy between same parties, once > six months from when first one began).
3. Next, see s.5(1). Any Assured Tenancy (i.e. AST or SAT) can contain "...in the case of a fixed-term tenancy...power for the landlord to determine the tenancy in certain circumstances, by the exercise of that power."
4. Section 21(1) expressly preserves L's right to use Part I of the Act (inc. section 5) to recover possession.
5. So, yes- there can be an early break clause even within the first six months.
6. Of course, there is no guarantee that T will vacate in accordance with the break-clause notice!

[pcwilkins]

6. Of course, there is no guarantee that T will vacate in accordance with the break-clause notice!

But presumably, if they didn't, they would effectively be squatting, as there is no agreement?

What if LL accepted rent from T after T should have vacated; is a new agreement created?

Sounds a bit of a minefield to me!

Peter

[jeffrey]

But presumably, if they didn't, they would effectively be squatting, as there is no agreement?

What if LL accepted rent from T after T should have vacated; is a new agreement created?

Sounds a bit of a minefield to me!

Peter
If T fails to vacate, L would still need to take proceedings. If this was on basis that T's failure to vacate was a breach of tenancy obligation, L would then need to serve Notice under s.8 (ground 12) with attendant delay. I do not know if L could go straight to seeking possession on break clause, outside 1988 Act's provisions.

L's acceptance of rent after serving break-clause Notice could mean collision with L's claim that tenancy was terminated by the Notice (a difference from s8/s.21, which assume that the tenancy is still in force until Court orders otherwise). It could therefore create a new tenacy accidentally.

[CharlieLevy]

All of this information is very much appreciated. Please can I check that I've understood it all correctly?

I have a case for arguing that this clause puts me as a sitting tenant who can be given three months notice to move by a new landlord after, and only after, the property is sold. However the case is a long way off clear cut. Crucially its not clear cut enough for my landlord to inevitably be told by a lawyer not to bother trying to enter into a battle with me.

[pcwilkins]

I have a case for arguing that this clause puts me as a sitting tenant who can be given three months notice to move by a new landlord after, and only after, the property is sold.

Yes. Although I'm not sure if the new LL can give 3 month's notice either; because he hasn't sold the property!


However the case is a long way off clear cut.

It is perfectly clear cut as far as I am concerned.


Crucially its not clear cut enough for my landlord to inevitably be told by a lawyer not to bother trying to enter into a battle with me.

The clause you mention gives the LL the right to give you three month's notice after he has sold the property.

Now, once LL 1 (current LL) has sold the property, he can't give you 3 month's notice 'cos he's not the LL any more.

And LL 2 (the new LL) can't serve you three month's notice either; because he hasn't sold the property yet.

That's what I think, anyway. I'd be interested to read your LLs counter-argument.

Peter