Buyer wants vacant possession before exchanging

Jasmine_10

Hi
We recently put our flat on the market and it is tenanted. It went under offer within about 3 days.
We were very pleased but the buyer is saying we must secure vacant possession before contracts are exchanged. Notice is 2 months and we are reluctant to do this as the buyer could withdraw their offer between now and the New Year.
We would have to put another tenant in and put off the sale until next year when our lease would drop to 81 years.
Our tenant has been reliable and amenable and we have (probably mistakenly) told him we wouldn't be serving him notice until we'd exchanged contracts.
Does anyone know what might happen if our tenant decides to be awkward and we can't get him out? Would the buyer be able to sue for breach of contract?
I'll be seeing our solicitor next week but would like to know if anyone else has been in this position? What did you do?
Thanks.

chris_m

Jasmine_10 wrote: »

Does anyone know what might happen if our tenant decides to be awkward and we can't get him out? Would the buyer be able to sue for breach of contract? .

If you've managed to persuade them to be as daft as to exchange (*) without the property being vacant, yes - and any/all costs incurred by them due to your failure to complete and any other buyers further down the chain should completion not occur when the contact says, which could amount to more than a pretty penny.

(*) which, if they are using a mortgage, their lender will insist upon the property being vacant so you have to persuade them as well.

emmatthews

When you exchange you also set a date for completion. If your tenant is still in situ when you exchange, then decide they're not moving you will be in a whole heap of bother.

Regardless of what your buyer wants, YOU should want the flat vacant at time of exchange.

It may also be a requirement of the mortgage lender. I thought they insisted upon a property being vacant at time of completion but it may be exchange, I'm sure someone will be along shortly that will know.

Alter_ego

Vacant possession before exchange is normal.

maninthestreet

Your buyer is being perfectly reasonable in asking that the property is vacant at the point of exchange.

franklee

The buyer is being sensible and will probably want to inspect the property after it's vacant before exchange of contracts. It's also better for you as if you exchange without knowing for sure the tenant has gone the tenant may not leave on time and you will fail to complete on the sale in time. When you exchange contracts the completion date is fixed and you must meet it or the buyer will be able to sue you.

Prothet_of_Doom

Actually all your buyer wants is Possession of the Property on the Day of COMPLETION , but as we all know the current tenants do not have to move out until a court order has been served and then not until the court appointed bailiffs turn up.

And if they don't move out on the day of completion, the buyer can claim out of cost expenses, which could run into thousands.

AND that is what YOU pay your solicitor to advise you of. If he hasn't explained the risks to you, you should be asking them why not.

On the other hand, there is a risk that your vendor could walk away from the deal, until they actually exchange contracts, and then you've got an empty flat and no buyer, so you might ask your solicitor how you make this commitment whilst your buyer can ask you to take all the risk?

Jasmine_10

Thanks for all of your very useful replies - it really helps to get another perspective.

What I should have added is that our estate agent prior to marketing said you don't usually serve notice until exchange.
The buyer doesn't require a mortgage as she is downsizing.

G_M

Your buyer is being more than reasonable.

Personally I would not even start the buying process till you had vacant possession. I certainly would not risk my money on a survey, searches, legal costs, mortgage application, on a property with tenants in situ.

the risk of spending all that cash, only to later find the tenants are going to refuse to leave till they are forced out by bailiffs, many many months dow the line, is not worth it.

I'd tell you to get the tenants out first, or I'd look for another property.

you want your cake (rental income) and to eat the cake too (get a legally committed buyer).

totally unreasonable.

Of course, if you Exchange and then the tenant refuse to leave by the Completion date, the financial risk is yours - you'll be paying your buyer's hotel bills, and all other related bills, not to mention other peiple in the chain.

But the buyer also suffers the trauma of having their purchase fall through/be delayed.

Do the right thing. End the tenancy and then sell your property.

Bluebirdman_of_Alcathays

Jasmine_10 wrote: »

Thanks for all of your very useful replies - it really helps to get another perspective.

What I should have added is that our estate agent prior to marketing said you don't usually serve notice until exchange.

Your estate agent is (almost) by definition, unqualified.

Your buyer's solicitor will have told them not to exchange until vacant possession has been gained. They are qualified.

Unless you sell to another LL, vacant possession on exchange is entirely normal.

Thrugelmir

Jasmine_10 wrote: »

Notice is 2 months and we are reluctant to do this as the buyer could withdraw their offer between now and the New Year.

This is a downside of letting property that's rarely considered. Exiting the investment isn't necessarily straightforward. More than likely will come at a cost as well.