Rights of Tenant when House is repossessed and sold on

merched50

We have just heard that receivers have been appointed by the landlord's mortgage company and that they plan to auction it next month with us as sitting tenants. We have a two year tenancy which only started in May. The receivers say they will be our new landlord until the property is sold. We are trying to establish how secure we are. We have been told by someone that if we pay rent to the receivers that means they are taking on the tenancy, and any new owner would have to honour it. But the receivers say when the house is sold it is up to the new owner what they do with us. Any informed advice welcome ! Thanks.

silvercar

Sounds like the landlord had a mortgage that allowed renting and the lender is therefore obliged to acknowledge the tenancy. If the property is being sold with you in situ then the new owner will be your landlord and will take over the tenancy agreement as such.

The new owners action will be limited to what they can do, by the tenancy agreement. I would expect that you remain in the property until the end of the fixed term and will be given formal notice to pay rent to the new landlord.

I wouldn't expect to stay beyond the end of the fixed term and if the new owners take over before a break clauxe (if you have one) they may well give you notice at that time.

Did you pay a deposit? Is it registered with a scheme?

merched50

Well that sounds encouraging, thank you silvercar. We do not have a break clause - deliberate as we have already had to leave one house because the owner was having to sell so was able to give us notice as we were past the end of our six month tenancy. To answer your other question, we paid a deposit which is registered with a proper scheme. My worry is that I've read message boards where the tenancy doesn't mean a thing and people are evicted pretty quickly.

silvercar

If they were going to evict you, they would already have taken steps in that direction.

Your risk is that the new owner may not want to be your new landlord. He may be slow in doing repairs/ difficult to contact etc in the hope that you will agree to leave. The fact that the property will have been sold with you in situ means that the new owner has no option but to accept you as the tenant.

Its particularly interesting that you have a 2 year tenancy (and that the lender is acknowledging it), most BTL mortgages restrict borrowers to issueing 12 month tenancies.

merched50

Well I think the lender is only just finding out about the two year tenancy. Looking at the timescale, it seems that steps were already being taken to recover the property before we even moved in. And we had a visit today from someone representing another mortgage company who seem to have an interest in the property. And the original landlords do not even seem to know what's happening ! Bit of a mire. But thanks very much for your information as it is encouraging.

silvercar

I would make sure everyone who claims to have an interest in the property knows you are tenants living in the property.

Download the deeds from the land registy site (£3) so you can see who has charges over the property. Let each one know that you are tenants. You only need one to go to court to evict you and the notification letter go missing and you are stuffed.

Ignore the original landlords, if the property has been repossessed they have no interest in the property - though technically they are in breach of your AST by not providing you with the property.

merched50

We did that, but only one mortgage company was named as having a charge on the property. Could it be that a second mortgage was taken out a few months ago and hasn't made it to the LR yet ?

Premier_2

For peace of mind, it might be worth trying to get a copy of the sale particulars from the auction house to make sure it is being advertised with the fact the property is already tenanted.

If so, then any new owner would have to abide by the terms of the existing TA.

merched50

Thanks Premier, we will do that but they are not available until Sept 1. The auctioneers Allsops have said it will be advertised with us as sitting tenants, but it was they who also said once it's sold it's up to the new owner whether they want to keep us on or not. But a solicitor friend has told us that as long as Allsops accept rent from us in the meantime, then the tenancy is binding. That is why we are confused because you would think Allsops would know the business inside out.

merched50

Now the dust has settled, thought it might be worth telling the outcome and what we've learned in case it helps other renters facing repossession from BTL landlords.
We are still in the house which was bought at auction (with us as tenants) by a professional landlord who seems much better than the previous one.
He had to honour our contract only because the receivers accepted rent from us, otherwise we could have legally been evicted.
None of the lenders would speak to us, even though we were tenants, because we were not their customer.
When the house was up for auction, there were lots of viewers outside which was horrible. They came on to our private property, walked round the back etc. We refused to let anyone in to look round, which we were entitled to do.
Personally I think rental agents should make some kind of check on the finances of the landlord, just like they do the tenant, so both sides are protected.
This was the second time this had happened to us, except we were given notice to quit the last place as our AST had ended.
A cautionary tale from a sell-to-renter ! Fingers crossed this landlord is as good as he seems.

debtfreein4years

Am glad that you have not had to much of a hassel compared to what you could have. thanks for updating everyone on what the eventual outcome was.

gxx