Tenants and Exchange of contract

leanne86

Silver car thank you for your response, however i don't think i explained myself properly.

When i said tennants will be given their notice to leave on march the 8th, i meant they will be given their 2 month notice to leave on this date so would be expected to leave the property by 8th may. (the seller demanded we exchange contracts prior to them giving their tenants notice, incase all fell through and they were left tennat-less, hence the conditional contract)

If the tennants dont leave on the completion date then the contract no longer stands, the sale will fall through and we will be able to walk away with our deposit.

In regards to our flat, we can't give notive on 5th April to leave 5th May as we dont complte until the 8th of may (if natwest will extend mortgage by a few days). We have enough money to give notice May 5th to leave June 5th, and pay for a month overlap. This gives us reassurance that if the tennants dont move out and the sale falls through that we are not made homeless.

Why did i choose a property with tenants!!

G_M

Why did i choose a property with tenants!!

Why indeed?

leanne86

Well tenants were the only negative. It's in our price range, in the perfect area (nice area, and good bus and travel links to work), 3 bedrooms, downstairs loo, 2 parking spaces, gardens and only 5 years old. Been looking for about a year and this is the only place so far that has met all our needs so we had to go for it.

franklee

leanne86 wrote: »

If the tennants dont leave on the completion date then the contract no longer stands, the sale will fall through and we will be able to walk away with our deposit.

It seems to me you are bending over to help the landlord out here yet you are taking the risks so I hope you have got a bargain to make this worthwhile. I say this as it's not unknown for tenants who aren't happy at being moved on to cause damage. Does the contract allow you to do a final inspection after the tenants have left and get redress for any damage?

Also did you get to meet the tenants e.g. during a viewing to get some idea of if they are likely to be co-operative. If not can that be arranged.

leanne86 wrote: »

Contracts should be exchanged within the next day or so, so the tenants can be given notice to leave on the 8th March (their rent day). However the tenants will not be obliged to leave until 8th May, our mortage expires on the 5th May. So solicitor is contacting Natwest to request a few days extension.

This giving of notice you mention is a bit tight, if the 8th is the first day of the period then the notice needs to be served before then, that is arrived on their doormat by close of business on the 7th at the latest. So either hand delivered on the 7th or posted a few days before that to allow transit time. Also as you know the tenant doesn't have to leave when the S21 asks.

Anyway thanks for the update I hope you let us know how it goes.

chappers

As already has been said and also by a conveyancing solicitor , it's up to you wheter you want to take the risk and exchange before the tenants are gone.
Worst case scenario: You exchange whislt tenants are still in occupancy, they refuse to leave and you don't complete before your mortgage offer expires, you then can't get a mortgage and can't complete. you lose your deposit and vendor sues you for their losses.
It's up to you but personaly speaking I wouldn't exchange until the property was vacant.

DVardysShadow

chappers wrote: »

Worst case scenario: You exchange whislt tenants are still in occupancy, they refuse to leave and you don't complete before your mortgage offer expires, you then can't get a mortgage and can't complete. you lose your deposit and vendor sues you for their losses.

Well, anyone can sue anyone for anything. The question is whether it can be made to stick.

In this case, the vendor should be contracting to give vacant possession, so would be suing the buyer for his own default. Obviously care needed to ensure that the contract is not open ended time wise.

leanne86

Natwest have agreed to extend the mortgage offer until May 21st. So exchange will take place tomorrow. Tenants will be given 2 months notice on Monday so will vacate by May 8th. I believe completion will be set for May 10th. If tenants have not vacated the conditonal contracts kicks in, we would be able to get our deposit back as the seller is unable to offer vacant possesion on that day. We would however lose solicitor and survey fees. We met the tenants during the viewing, they appeared cooperative and were well aware that they would be given notice to leave shortly.

Thanks for all your comments.

Fire_Fox

leanne86 wrote: »

Natwest have agreed to extend the mortgage offer until May 21st. So exchange will take place tomorrow. Tenants will be given 2 months notice on Monday so will vacate by May 8th. I believe completion will be set for May 10th. If tenants have not vacated the conditonal contracts kicks in, we would be able to get our deposit back as the seller is unable to offer vacant possesion on that day. We would however lose solicitor and survey fees. We met the tenants during the viewing, they appeared cooperative and were well aware that they would be given notice to leave shortly.

Thanks for all your comments.

Is this a special clause written into your contract?

timmyt

StiflersMom wrote: »

I bought my house under a "conditional exchange" as the tenants were still there at the point of exchange (but gone by completion). Worked very well...

yes, a very good way, if the buyer has no related sale. I have done that before. Ignore he semantics on 'conditional exchnage' or 'completion is conditional on..'. The point is you can back out of the contract if the tenants have not gone by a certin date.

my advice is never to xchnage until the tenants have gone, and yes you lose rent if it aborts. most transactions dont, compared to how many exchnage, so the risk is not great - but it still exists.

chappers

I would be very wary of exchanging under these circumstances.

Hypotheticaly speaking what would happoen in the followinfg scenario.

Mr x owns a property which he is selling to mr y, they exchange contracts on the 1st with a veiw to completing on the 20th(mr y's mortgage offer expires on the 21st).
on the 20th mr x's tenants are still in occupation, so he cannot give vacant possesion.
Mr y's solicitor then serves a notice to complete on the 20th giving the vendor 10days to complete, on the 22nd the vendor has vacant possesion and is in a position to complete but mr y can no longer secure a mortgage and cannot therefore complete.
Who is at fault?