liability between exchange and completion - with a twist...

akrot1

Hi - can anyone let me know what the legal issues that i will face in the following scenario. I am planning to buy a house but have 2 months between exchange and completion as seller does not want to complete until his ERC expires - we have agreed therefore that i can rent his property for £1/month for the period in between exchange and completion.

What problems do i face - who is liable if the boiler breaks or house burns down - that kind of thing. What extra legal work is involved from my side given that I'm renting for 2 months (I'll get him to pay for this of course!)

Are there any other issues I need to consider or scenarios I might not have thought about?

Can I do any DIY or paint any rooms, do any renovating or would I have to get "landlord" permission.

Thanks very much.

G_M

You'll be a tenant. He'll be your landlord.

You can't decorate, build etc without your LL's permission.

LL has to give you an EPC and a gas safety certifictae. He has to maintain the property (yes, boiler!). He can't access the property without your consent. He needs consent to let from his mortgage lender. He needs permission from his insurer and/or specific LL insurance.

Are you using a solicitor for your conveyancing and if so what does he advise?

DVardysShadow

If the boiler breaks down, I would say you should accept it as your loss, because the risk would be with you if you bought when you moved in. For the burning down scenario, you should insure the property between exchange and completion anyway - and declare to your insurer that you will be living there. You may find contents insurance a bit of a 'computer says no' nightmare because you will be a tenant for 2 months and then you will be an owner occupier - contents insurance is different in these cases.

Careful_with_that_Axe

When buying a property some years ago, I ask solicitor about the possibility of doing something similar and he strongly advised against it. I hope you are geting professional advice.

G_M

DVardysShadow wrote: »

If the boiler breaks down, I would say you should accept it as your loss, because the risk would be with you if you bought when you moved in..

I disagree with this.
a) OP is a tenant so LL has repairing obligation
b) seller has a duty to hand over the property at Completion in the same condition as it was at Exchange. If boiler breaks down between Exchange and Completion, seller should repair.

silvercar

G_M wrote: »

You'll be a tenant. He'll be your landlord.

You can't decorate, build etc without your LL's permission.

LL has to give you an EPC Not necessary if it is not being advertisedand a gas safety certifictaedefinitely needed.. He has to maintain the property (yes, boiler!). He can't access the property without your consent. He needs consent to let from his mortgage lender.Without this what could happen? Tenant be evicted? landlord's mortgage called in? Realistically for two months there is little action that the lender could take given that the mortgage is being redeemed in 2 months time. He needs permission from his insurer and/or specific LL insuranceTrue, if he is covering all risks- it may be cheaper for the buyer to obtain insurance in this instance as it is the buyer that is obligated by the purchase contract..

Are you using a solicitor for your conveyancing and if so what does he advise?

Solicitor's usually advise sellers not to allow the buyer to occupy until completion. There is not usually a reason for the buyer not to occupy earlier.

DVardysShadow

G_M wrote: »

I disagree with this.
a) OP is a tenant so LL has repairing obligation
b) seller has a duty to hand over the property at Completion in the same condition as it was at Exchange. If boiler breaks down between Exchange and Completion, seller should repair.

Strictly, a] and b] are correct. But we all know that the tenancy is a contrived arrangement to disguise a purchase for the purpose of avoiding and ERC. So I am viewing this as a purchase

OP benefits by not having to pay a mortgage for 2 months and having just a peppercorn rent.

timmyt

akrot1 wrote: »

Hi - can anyone let me know what the legal issues that i will face in the following scenario. I am planning to buy a house but have 2 months between exchange and completion as seller does not want to complete until his ERC expires - we have agreed therefore that i can rent his property for £1/month for the period in between exchange and completion.

What problems do i face - who is liable if the boiler breaks or house burns down - that kind of thing. What extra legal work is involved from my side given that I'm renting for 2 months (I'll get him to pay for this of course!)

Are there any other issues I need to consider or scenarios I might not have thought about?

Can I do any DIY or paint any rooms, do any renovating or would I have to get "landlord" permission.

Thanks very much.

speak to your solicitor, if you have paid for an actual solicitor, otherwise they may be out of their depth and so you are stuck and will wish you'd paid more for your conveyancing

Fortheloveofmoney

I actually did this. I moved in to the house I'd made an offer on 2 weeks after viewing it. It took a further 2 months for the sale to go through.

The house was empty and I was desperate for somewhere to live as I had to be in before Christmas due to personal circumstances and had 2 purchases fall through just after survey and searches has been completed.

I had to sign a tenancy agreement and paid a discounted rent. It was fairly hassle free for the vendor as they didn't live there anymore and the property didn't have a gas supply.

The only problem I had was a door to a large cupboard/larder in the kitchen decided to lock itself from the inside and I just couldn't get it open. The cupboard contained all of my food and the fridge freezer so quite essential really. Anyway, I had to break the door handle and damage the door slightly to get in. I never told the vendor about it and just removed the door once the sale had completed.

As I was buying the property and had done the damage it never really occurred to me to ask them to fix it.

My solicitor was aware that I'd moved in to the property before exchange and he didn't have a problem with it.

The situation worked out well for both sides really.

akrot1

Thanks all for your help - interesting response.
I cannot imagine he'll get consent from his lender as they might charge him and he's trying to save costs not increase them?
What does specific landlord insurance cover - if he decides not to get this am i right in saying this will be at my risk? If so, then i think i'll insist on evidence that he has this before we exchange, he's saving lots of £ (wish i knew how much!) so 2 months worth of landlord insurance, a certificate to say electrics and gas is in order will be little for him i hope!
Have got a solicitor so will discuss with him - if he decides to charge me extra for this then again, seller should pay for this as he should be trying to put me in the position i would have been in had we exchanged when i want to and the date he originally said.