Buying a house that has a tenant in it.

jonnie123

Hi, I'm in the process of buying a house that has a tenant in it at present. We're due to exchange contracts on it shortly, how liable am i for the property from time of exchange of contracts until completion?
We will only complete when the property is vacant and after a final inspection.
Do i have to take out buildings insurance on the property (after exchange)and why? surely the landlord (Vendor) will have that in place already?
The tenant is due to leave the property at the end of november (that completes his 12 month let), although he hasn't be notified yet that the house has been sold, the vendor will do that at the end of august, giving him 3 months notice to leave, hopefully he may leave sooner!
We're putting up a 5% deposit on exchange, i just want to make sure our deposit money is 100% safe for return, if anything drastic was to happen to the property whilst in the tenants care before we complete on the property.
Hope that all makes sense, any help or advice greatly appreciated.
thanks j.

G_M

If the house burns down, you still have to Complete. OK - the current owner SHOULD have insurance, but a) claiming gets complicated if its not your policy b) what if he does not have insurance and c) (if you are getting a mortgage) will the bank still hand over the mortgage cash to Complete if the house is not there and you do NOT have your own insurance?

Also check which version of the standard contract is being used at Exchange, (and whether there are any variations to terms relating to insurance).

For the sake of the cost of a couple extra months insurance buy yourself some peace of mind. Insure!

ps - is there a chain? If the tenant fails to leave, the only way the vendor can evict is through the courts which takes time. OK, so you're buying 'with vacant possession' and can refuse to Complete if the tenant is still there, but if you are simultaneously selling somewhere, you'll still have to sell..... and be homeless...?

charliee_3

i am def no expert but that sounds like a really long time between exchange and completion... 4 months???

i would imagine you would be advised to take out insurance from exchange in case anything happens as you are legally bound to complete, even if it is reduced to rubble in the meantime.. i dont know how it will affect it having tenants in at the moment though...

and how do you KNOW the tenant will leave in November? if they dont know the house is being sold are they aware they may have to move or are they thinking they can just carry on living there.. they may get their notice to quit, but if they say they arent moving and throw themselves on the mercy of the council to house them they could be told to stay put to prevent them making themselves homeless and be there for months more...and if the landlord doesnt follow the letter of the law they may be able to delay it whilst he gets the proper court orders etc.. just telling them they will have to leave may not cut it.. they could trash the place if they feel like it.. who would be liable then?? what does your solicitor say about all this??

kai666

when I bought my house, which had tenants, my solicitor had it put in the terms and conditions that the vendor was responsible for the insurance until the completion.

jonnie123

we're not in a chain, we're now just living with family (our house sale fully completed). So can move in whenever, tomorrow if we could!
So who is responsible for getting rid of the tenant if he doesn't leave, me or the vendor, once we've exchanged? And how long can that take, if it has to go through the courts? Our mortgage offer and survey is only valid for 6 months, so if the tenant doesn't leave at the end of november and it drags on for 3 or 4 weeks into december, bang goes all fees involved in that and we have to start again!
Trouble is we really want to buy this house, the vendor has got us by the balls, we have to abide by all his demands. I don't think he'd be too bothered if he didn't even sell it at the moment, as he's got a good tenant in there, who would probally like to extend his time there. We viewed the house twice last year when it was vacant (then our house sale fell through, so he then let it out), but now he won't let us view it again until we've exchanged and he's given the tenant the 3 months notice (at the end of august), as he doesn't want to upset the tenant, as he gave him his word he could stay there til at least the end of november, obviously we'd really like to view again before exchange of contracts, but the vendor is being awkward. what do we do? Don't really want to lose this opportunity, there's nothing else around we're interested in!

Blackpool_Saver

Sorry to be a downer but this sounds a real headache, there are so many cheap houses to choose from now, can't you find one without all this added worry of a tenant in it?
I am sorry i don't mean any offence.

PasturesNew

jonnie123 wrote: »

...we'd really like to view again before exchange of contracts, but the vendor is being awkward. what do we do?

The vendor isn't being awkward, he's giving the tenant "quiet enjoyment" of the property, his home ... which is the tenant's legal right. He COULD ask the tenant, but then the tenant would know something was up .. and the tenant could say "No".

samroo

The Landlord / Vendor here wants everything his / her own way. The proper way to sell a house with a tenant in situ, unless you intend to continue to lease the house to them, is to exchange when the property is vacant and you have done your final inspection. Do not exchange contracts until the vendor has fulfilled his obligations.

Mrs_Bumble

I personally think that you could have a real headache here, if the tenant doesn't move out. Does the lender know that the tenant is still in situ, can't see them being happy about that as the tenant could be classed as having a prior interest to their charge (I believe).

If I was you I would not exchange prior to the tenant vacating the property. If the tenant doesn't want to move out and refuses then there is all the hassle and cost of having them evicted, what you going to do then?

The landlord can issue notice for them to leave the property before the end of their tenancy agreement and so why aren't they? All seems a bit underhand?

What has your solicitor suggested?

barnaby-bear

jonnie123 wrote: »

we're not in a chain, we're now just living with family (our house sale fully completed). So can move in whenever, tomorrow if we could!
So who is responsible for getting rid of the tenant if he doesn't leave, me or the vendor, once we've exchanged? And how long can that take, if it has to go through the courts? Our mortgage offer and survey is only valid for 6 months, so if the tenant doesn't leave at the end of november and it drags on for 3 or 4 weeks into december, bang goes all fees involved in that and we have to start again!
Trouble is we really want to buy this house, the vendor has got us by the balls, we have to abide by all his demands. I don't think he'd be too bothered if he didn't even sell it at the moment, as he's got a good tenant in there, who would probally like to extend his time there. We viewed the house twice last year when it was vacant (then our house sale fell through, so he then let it out), but now he won't let us view it again until we've exchanged and he's given the tenant the 3 months notice (at the end of august), as he doesn't want to upset the tenant, as he gave him his word he could stay there til at least the end of november, obviously we'd really like to view again before exchange of contracts, but the vendor is being awkward. what do we do? Don't really want to lose this opportunity, there's nothing else around we're interested in!

Once you are exchanged you are contracted to complete.

Once you complete you are responsible for the tenancy and have taken it over, if the tenant still in place you have to get rid.

However if the mortgage company will usually only release completion funds for vacant possession (theoreticallu the tenant could be there another 6 months +) unless you are buying it as a buy-to-let.... so if by completion there isn't vacant possession the mortgage company will refuse to release funds and if exchanged you will be obliged to complete so you need to make sure you have equivalent to the mortgage in cash to complete if needs must.

The fact the tenant knows nothing, the LL wants it that way or/and no viewings being permitted by tenant suggests the tenant maybe reluctant to go/problem tenant.....

I guess if you have cash to complete without a mortgage and then can afford the time and costs to evict and don't mind buying somewhere unseen....

silvercar

If the seller is selling with vacant possession the seller is responsible for ensuring the tenant moves out. The safe way is to not exchange until the tenant moves out; that is the only way to guarantee vacant possession at completion.

If the seller takes the risk that the tenant will move out at the end of the notice period, the seller would be liable for not completing on the contract by not providing vacant possession. There is no way the buyer is going to take on the respnsibility of getting vacant possession from the seller's tenant unless it is written into the contract.