Buying a flat with tenants- contract advice

HappyMJ

[Deleted User] wrote:

In the process of purchasing a flat with tenants, which we are intending to live in. Landlord has said he will give them notice (they are on a 2 month notice period, we have seen proof of this) when we exchange. We are on a 2 month notice period with our flat so that's fine. Due to exchange by end of this week.

Got the draft contract yesterday, and the only mention it makes is to say that 'at legal completion the seller will transfer ownership of the property to the buyer with vacant possession.' This is all fine, however that's all it says regarding his end of the bargain, and then goes on to say if we don't complete by the agreed completion date that we he is able to sue us. The only way we wouldn't complete on the agreed date would be if the tenants hadn't left, which wouldn't be our fault.

I will be ringing the solicitor first thing on Monday, but I wondered if anyone with any experience knew what I should be requesting is amended? It seems to me that a specific date for giving them notice and them being out should be specified, but that's almost impossible to know if he's refusing to serve them notice until contracts are exchanged. We'd also like something in there which covers us should we not be able to exchange- ie if we can't complete on the agreed date because tenants are still in, he has to compensate us as we will be homeless.

We have spoken to the tenants ourselves and even though they haven't had notice they know we're moving in so have started looking round for new property themselves, so we don't anticipate any issues- however I'd like something concrete in the contract so that if something goes wrong, we're the ones who are protected.

Any advice welcome (unless it's along the lines of "this is why you don't start proceedings on a purchase until the tenants are gone" as we're here now and as specified above the landlord refused to service notice until exchange). Thanks!

As it's a flat he was probably expecting to sell to another investor who wouldn't mind the tenants staying in occupation so he hasn't given notice to them yet. I wouldn't give notice to my tenants whilst I was trying to sell my property. It's not that type of property which I would think would appeal to buyers who want to live in it as their forever home. It's a good investment property though.

If they fail to move at the expiry of the Section 21 notice then he's the one holding up completion so you can sue for costs incurred. The tenants may not be able to secure new accommodation and may not move. However, they will be incurring costs by not moving so it's in their best interests to move as soon as they can. If they are reasonable tenants they'll move around about the date that the notice says and the purchase will complete as normal. You don't know if they are though.

Voyager2002

[Deleted User] wrote:

In terms of additional costs ie accommodation costs, we are going to ask our solicitors to have something out in the contract where by he pays X amount a month should we not complete and have to find somewhere else to live. We just want to cover ourselves as best we can in this not ideal situation.

Bad move: you don't actually know what costs you would face if you had to leave your current property but could not move in to the new one. The courts frown on penalty clauses, but as stated above you could sue the vendor for any expenses that you incurred as a direct result of his failure to provide the flat with vacant possession on thee agreed date. Do be aware that there is a difference between a court ordering him to pay an amount of money, and you actually having that money in your account.

ViolaLass

[Deleted User] wrote:

Thanks for the smug responses. If anyone has advice on the question I actually asked I'd be grateful.

You asked how the contract you should be amended. The first two responses (and others) answered that.

[Deleted User]

Thank you Happy MJ, that is very helpful.

Ah Voyager I was not aware of that- this is the sort of advice I was after. I will keep that in mind when speaking to my solicitor, thank you.

theartfullodger

[Deleted User] wrote:

Thanks for the smug responses. If anyone has advice on the question I actually asked I'd be grateful.

Responding to posters with "smug" may not get the best response.... And if that is your attitude I wouldn't be expecting the best responses from agents, solicitors or anyone else one does business with.

You have been told 2 months notice needed: That is dangerous on two counts...
a) Even if it is an AST (see -b- next) the s21 notice, even of valid is but the 1st step. Then court proceedings, then bailiffs. Realistically 3-6 months.
b) It may not even be an AST if tenants moved in early enough - it could be AT (no s21, no 2-month notice route) or "Rent Act" almost impossible to evict.

See Shelter's excellent advice on both these matters.

In your shoes I would arrange (if they'll have you) with tenants to pop round and ask them what their plans are & when they 1st moved in: Then let us know how you get on.

Is this in England or Wales by the way?

That the vendor has not already evicted the tenant is interesting, as usually vacant properties with easier move-in dates get better prices: Or he's desperate for the rent money so might be susceptible to a late price drop....

Cheers!

AdrianC

[Deleted User] wrote:

Thank you AdrianC. Yes we of course tried very hard to tell him not to be so measly minded, he refused to budge.

<shrug> Your only choice, then, is to walk away. There are other flats.

He is selling the entire block of ten flats and is not giving notice until exchange on any of them.

Is he also the freeholder?

We are willing to risk everything you have listed. If he would be liable for directly incurred costs, would that be as the contract currently stands? Or would we need to have something else written in?

As currently written - that's kinda the whole point of exchanging contracts.

In terms of additional costs ie accommodation costs, we are going to ask our solicitors to have something out in the contract where by he pays X amount a month should we not complete and have to find somewhere else to live. We just want to cover ourselves as best we can in this not ideal situation.

He would have to agree to that amendment to the standard contract. This is very unlikely. The standard contract includes liability for all directly incurred costs, including alternative accommodation.

The all-time classic thread on this situation is here...
https://forums.moneysavingexpert.com/discussion/1806123
Note that, although that's the actual vendor not the tenant refusing to move, there's little practical difference - except you know that the tenant will, eventually, be evictable.

paddy's_mum

This is almost certainly dead in the water.

Your solicitor would be opening himself up to all kinds of disciplinary proceedings if he goes ahead risking the mortgage companies money by exchanging on a property where it is highly likely that completion will be thwarted.

Pixie5740

The OP was already warned not to do this but he knew it all back then and he knows it all now.

https://forums.moneysavingexpert.com/discussion/5382316

I think you're wasting your time trying to have things written into the contract. If you exchange and the vendor cannot complete with vacant possession then you're already covered. I would be very surprised if the vendor's solicitor let him exchange with tenants in-situ though. I would also be surprised if your solicitor allowed this as your solicitor will also be working for the mortgage lender.

[Deleted User]

ViolaLass wrote: »

You asked how the contract you should be amended. The first two responses (and others) answered that.

I was referring specifically to the second response, which contained no advice on how to amend my contract. Quoting what I asked to not be told with a smug 'good luck' is not helpful.

I appreciate that 99% of people would not have started any proceedings on this property until tenants were gone. I realise this would be the ideal scenario. But it wasn't a possibility so now we are here, I am not interested in hearing what I should have done or how other people wouldn't have proceeded, I just want advice on how best to protect myself if in the situation I am in now.

AdrianC

[Deleted User] wrote:

In addition to your other advice, we are in London and our solicitor is in Manchester

That's not the end of the world. I've always found the M40 to be a better route to the M6 than the M1, but the train will be easier, depending on what short-notice fare you can find.