New Buyer Inheriting Rent Arrears

Gallows7

Does anyone know whether a new buyer of a property (if bought with tenants in situ) inherits the rent arrears? I'd never heard this before, and it doesn't sound right to me. Surely any rent arrears would have to be pursued by the old landlord not the new one.

G_M

The new buyer becomes the landlord and takes over the existing tenancy.

That includes historic issues eg rent arrears, repairs, disputes etc.

Buyer should check the tenancy, the tenants, and the tenancy history carefully before taking it on.

Gallows7

Thanks, I found something about Section 23 -Landlord and Tenant (Covenants) Act 1995, and a clause about the amount that is in arrears. Looks like the rent has to be two months in arrears if paid monthly to be inherited by the new owner otherwise the old LL has to pursue the arrears. Could be completely wrong in my reading of this though. But it looks that way to me.

Unless new landlord agrees to take on all rent arrears of property when buying, which I very much doubt anyone would do.

Still seems odd to me that new owner is left dealing with old rent arrears.

quidsy

Just request tenants are removed legally before exchange. Then get your own new tenants in once you are owner

Pixie5740

Gallows7 wrote: »

Still seems odd to me that new owner is left dealing with old rent arrears.

It seems odd to me that a BTL investor would invest in a property with tenants-in-situ who have a habit of not paying the rent.

Gallows7

Unless the seller was misleading.

By the way, I'm an interested third party not the tenant or the landlord

Gallows7

Well you seem to be the only one here bothered about who I am. Do you police these forums for free? To everyone else, thanks for contributing.

silvercar

We are planning on taking on a property with existing tenancy.

Our solicitor has advised that we should start a new contract with tenants (their existing tenancy has gone past fixed term and become periodic) to begin on completion date, so we start with a clean slate.

He did say if that was not possible then we would be taking on the existing contract and so would be in a position to be owed rent arrears from existing tenant if there were any. An apportionment would be agreed with the seller (previous landlord) if it was expected that rent was owed for the time when he was landlord.

So the short answer is that yes a new landlord can pursue tenant for arrears if the contract is continuing.

G_M

silvercar wrote: »

We are planning on taking on a property with existing tenancy.

Our solicitor has advised that we should start a new contract with tenants (their existing tenancy has gone past fixed term and become periodic) to begin on completion date, so we start with a clean slate.

He did say if that was not possible then we would be taking on the existing contract and so would be in a position to be owed rent arrears from existing tenant if there were any. An apportionment would be agreed with the seller (previous landlord) if it was expected that rent was owed for the time when he was landlord.

So the short answer is that yes a new landlord can pursue tenant for arrears if the contract is continuing.

You can only "start a new contract with tenants" if they agree. You cannot force them to sign. Of course, since the existing tenancy is periodic, if they decline to sign a new tenancy you could evict them in the standard way - S21/2 months/court.

But I fail to see what your solicior means by "start with a clean slate." A new tenancy agreement will not affect any arrears that exist(ed) under the original agreement. If the tenants remain in occupation, the original inventory will still be the relevant one. If the tenants have a history of non payment, a new tenancy will not miraculously make them reliable payers.

In what way is this a 'clean slate'?

Gallows7

G_M wrote: »

You can only "start a new contract with tenants" if they agree. You cannot force them to sign. Of course, since the existing tenancy is periodic, if they decline to sign a new tenancy you could evict them in the standard way - S21/2 months/court.

But I fail to see what your solicior means by "start with a clean slate." A new tenancy agreement will not affect any arrears that exist(ed) under the original agreement. If the tenants remain in occupation, the original inventory will still be the relevant one. If the tenants have a history of non payment, a new tenancy will not miraculously make them reliable payers.

In what way is this a 'clean slate'?

Thanks. There's no question of the tenant being unreliable in this instance. The only concern is rent arrears that happened when the tenant stopped paying the old LL when she (the tenant) found out the property was in the process of being sold to a new owner. I say in the process, meaning that it had been sold but the new owner hadn't legally taken control of the property until about a month afterwards so there is about a month's rent outstanding in respect of the old LL not the new one.

Guest101

Gallows7 wrote: »

Thanks. There's no question of the tenant being unreliable in this instance. The only concern is rent arrears that happened when the tenant stopped paying the old LL when she (the tenant) found out the property was in the process of being sold to a new owner. I say in the process, meaning that it had been sold but the new owner hadn't legally taken control of the property until about a month afterwards so there is about a month's rent outstanding in respect of the old LL not the new one.

It doesnt work like this.

The property changes hands on one day, not in the space of one month