Changed goalposts in purchase agreement...

Vivienne_S

I have a quandary and I'm looking for advice. I'm looking to buy my first buy to let investment property. I found a place; it was already rented out and I was told by the estate agents and the letting agent and the tenants that they wished to stay having been there 2 years already - in fact there was even talk of them staying beyond 'the notice to vacate' date that had been served as they had no where else to go and would need to be evicted rather than make themselves homeless. Now given I was a BTL investor it was not a problem to have the tenants already so my offer based on market value minus work needing to be done, stated that I would take on the tenancy. I was told that the inventory and deposit would stay in place (I am using the same letting agent as the current owner) and therefore as and when those tenants eventually moved out it would be compared to when they moved in circa 2013. A sale price was agreed under these terms. Now 3 weeks later but before exchange of contracts much to everyone's surprise, the tenants have served notice and intend to move out at a very similar time to when I was aiming for completion. My worry now stems around who gets the inventory (curtains, blinds, lighting, standalone kitchen contents etc), and what happens if the tenants leave it in a mess - ie delapidation that the deposit might have covered, who gets the deposit and could I be left with a complete mess and no tenants deposit (if warranted), or inventory? Thankfully the carpets have to be cleaned / fumigated because they had a dog - so I don't think I can be left with that not having happened either. Is there anyway I can protect myself before exchange/completion through my solicitors given the probable change in circumstances since my offer was accepted? Should I slip my exchange / completion until after the last tenants have moved out or is it still in my interest to complete days before they move as per the original plan? Any advice would be much appreciated as this seems non- standard and is a grey area seemingly as my agents are not really too sure where I stand.

Hoploz

Delay exchange and inspect it once they've gone.

nids

you've dodged a bullet - vacant possession is what you really want

G_M

as an aside, when writing to your future tenants, and/or letting agents, do not use the style above.

Use short sentences, broken up into clear paragraphs. If asking quesions, separate these out so it is clear a reply is needed to each one.

If giving instructions, likewise.

You'll be a better landlord for it!

G_M

Vivienne_S wrote: »

.......it was already rented out ..... in fact there was even talk of them staying beyond 'the notice to vacate' date that had been served as they had no where else to go and would need to be evicted rather than make themselves homeless.
This is very common, normal, and legal. But as a landlord you are aware of that..

Now given I was a BTL investor it was not a problem to have the tenants already
provided you have completed due diligence.

...I was told that the inventory and deposit would stay in place
'you were told'? You are not aware of the contractual realities involved???
I'm getting concerned......


Now.... the tenants have served notice

My worry now stems around who gets the inventory (curtains, blinds, lighting, standalone kitchen contents etc),
Why has this changed? It is as agreed in the purchase contract and associated Fixtures and Fittings list. The tenants presence or absence makes no difference
and what happens if the tenants leave it in a mess
Inspect. The seller has an obligation to hand over the Property to the buyer at Completion in the same condition it is in at Exchange. So check the condition at Exchange.
- ie delapidation that the deposit might have covered, who gets the deposit
if the tenant leaves before you own, then the current owner/landlord returns the deposit to the tenants less any deductions
and could I be left with a complete mess Yes. So inspect before you Exchange and no tenants deposit if the tenants have left, why would you (who are not their landlord) get their deposit?

or inventory? I assume you mean the contents (the inventory is simply a paper document that is not your concern as the buyer). The contents should be as per your contract with the seller.

Thankfully the carpets have to be cleaned / fumigated because they had a dog - so I don't think I can be left with that not having happened either.
Don't count on it.
Is there anyway I can protect myself before exchange/completion through my solicitors given the probable change in circumstances since my offer was accepted?
Given the obvious gaps in your knowledge I strongly advise you NOT to attempt either Exchange and/or Completion on your own. DIY conveyancing is possible, but not for you - do it 'through your solicitors.


Should I slip my exchange / completion until after the last tenants have moved out
Yes
or is it still in my interest to complete days before they move as per the original plan?
No
Any advice would be much appreciated as this seems non- standard and is a grey area seemingly as my agents are not really too sure where I stand.

Do not rely on letting agents to advise you.

* Tell your solicitor to draw up the purchase contract "with vacant possession"
* Wait for the tenants to leave.
* Inspect
* adjust the purchase price according to the condition of the property - just as with any purchase
* discuss/agree the F&Fs list with the seller

Read:

Tenancies in Eng/Wales: Guides for landlords and tenants

Vivienne_S

G_M wrote: »

Do not rely on letting agents to advise you.

* Tell your solicitor to draw up the purchase contract "with vacant possession"
* Wait for the tenants to leave.
* Inspect
* adjust the purchase price according to the condition of the property - just as with any purchase
* discuss/agree the F&Fs list

That's useful.

I admit as a first time to be landlord whilst I have read a number of books and have instructed a letting agent on full management, I don't know it all yet.

I have bought and sold 5 properties of my own previously, all vacant possession, and so as soon as this one was going to be with tenants in situ I asked questions about how it would work differently but didn't get very satisfactory answers, and now that's changed again no really clear satisfactory explanations.

I instructed my solicitors 3 weeks ago but contracts have not been received from the vendors solicitors yet hence not knowing what the vendor is classing as fixtures and fittings. When I viewed the tenants belongings were mixed in with those of the previous landlord. Therefore I was expecting to have included in the sale, and laid that 'condition' out in my offer, all items listed on the extant inventory, on the basis that a selling landlord/vendor presumably wouldn't take away items the tenants had been living with for 2 years! Clearly the only way I could know that in advance of formal paperwork was to have been given a list of the last landlords inventory which I haven't had.

You talk of inspecting and adjusting the purchase price before exchange. I understand my offer as accepted was subject to survey but I take it from your comment that you don't think it would be unreasonable if the condition is below that that I would have expected given the change of circumstances that I can renegotiate. That said I'd be naive to think it impossible that the vendor may refuse to drop the price any further, knowing he has me in a corner having laid out good money for searches etc. What I'd rather is that he appreciates that and ensures the property is in a state ready to re-let as soon as we complete. Depends how decent he is I suppose.

G_M

Vivienne_S wrote: »

I admit as a first time to be landlord whilst I have read a number of books and have instructed a letting agent on full management, I don't know it all yet.

read my guide on letting agents in the link above!

I have bought and sold 5 properties of my own previously, all vacant possession, and so as soon as this one was going to be with tenants in situ I asked questions about how it would work differently but didn't get very satisfactory answers, and now that's changed again no really clear satisfactory explanations.

Inheriting a tenant can be risky. Better to select/vet your own then you are in control.

I instructed my solicitors 3 weeks ago but contracts have not been received from the vendors solicitors yet hence not knowing what the vendor is classing as fixtures and fittings.

This should be a standard part of the normal purchse process.

You talk of inspecting and adjusting the purchase price before exchange. I understand my offer as accepted was subject to survey but I take it from your comment that you don't think it would be unreasonable if the condition is below that that I would have expected given the change of circumstances that I can renegotiate.
Of course. If the tenants trash the place, and the LL does not repair, you should reduce your offer so that you can repair after you buy it.

Of course, the LL may keep the tenants deposit, use it to repair/redecorate, and then you have no problem paying the original price.
That said I'd be naive to think it impossible that the vendor may refuse to drop the price any further, knowing he has me in a corner having laid out good money for searches etc.
That is always the case in any purchase. Buyer gets survey done, finds a problem, tries to drop price, and seller refuses knowing buyer has paid out for survey......

What I'd rather is that he appreciates that and ensures the property is in a state ready to re-let as soon as we complete. Depends how decent he is I suppose.

He's not interested in your letting business. He's getting out. Don't expect too much!

Vivienne_S

nids wrote: »

you've dodged a bullet - vacant possession is what you really want

Why is that then? I thought having long term tenants in place would be an advantage especially if you take it on 'as is' - ie inventory, deposit et all. I knew a new tenancy agreement would be put in place to reflect my ownership/landlord responsibilities, and they had been warned the rent would increase fractionally (as it had been the same for 2 years, but market rates had risen). I saw it as a plus inheriting tenants. Now I think I'll have all the costs of initial readying for rental - cleaning, and redecoration possibly, and therefore an initial void before gaining a new tenant. I can't see the advantage - am I missing something?

Argghhh

think of it this way - previous tenants may have been landlords friends etc, may never have paid on time if at all. They might be loud and cause loads of aggro with neighbours which the landlord is responsible for sorting out. If you have vacant possession - you vett the tenants, your create the terms of the contract, you are in control, this way you do not inherit a pile of poo

G_M

Vivienne_S wrote: »

Why is that then? I thought having long term tenants in place would be an advantage especially if you take it on 'as is' -
yes, if ou do 'due diligence' which I suspect you have not
ie inventory, had you checked it? Was it signed by the tenants? did it have photos?

deposit
had you checked it was registered? Within the time limits? Was the PI served? Within the time limits?
Had you built into the purchase agreement arrangements to transfer the deposit?
et all.
Had you checked this was an AST?
Had you checked the tenants' references? credit record?
Had you checked the rent statements for payment history?
Had you seen the periodic inspection reports?
Had you examined the correspondance files to/from the tenancies? Wee there outstanding issues on either side?
etc etc
I knew a new tenancy agreement would be put in place to reflect my ownership/landlord responsibilities,
What makes you think that? What if the existing tenants did not want a new tenancy agreement but were happy with the existing one?

and they had been warned the rent would increase fractionally (as it had been the same for 2 years, but market rates had risen).
Had you checked the tenancy agreement to see what the terms are for increasing the rent?
I saw it as a plus inheriting tenants.
:rotfl::rotfl::rotfl::rotfl::rotfl:

Now I think I'll have all the costs of initial readying for rental - cleaning, and redecoration possibly, and therefore an initial void before gaining a new tenant. I can't see the advantage - am I missing something?

Yes. You are missing a lot.

However, since the tenants are leaving this is now academic.

1) buy the property
2) sort out the property
3) learn. Fast. About tenancy law, contracts, LL obligations etc
4) become fully compliant with the law
5) market the property
6) vet & select your own tenants (do NOT rely on letting agents )

Yes, there are costs, voids etc, but you are running a business. If you can't afford to do it properly, stop and think again.

* Deposits: payment, protection and return

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?

* Rent increases: when & how can rent be increased?

* Repossession: what if a LL's mortgage lender repossesses the property?

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

nids

I couldn't have put it better than G_M.

If, after all this, you don't realise you've dodged a bullet, you'd be best off not buying this property at all.