Offering tenants opportunity to purchase property

[Deleted User]

chanz4 wrote: »

guarantee you will have to pay the agents a fee for them buying it

G_M wrote: »

If you used an agent to find and/or manage the tenants, then read your contract with the agent.

You may have to pay them a sales commission.

This is what the terms of business says:

x) Sale of Property
Should the landlord wish [management company] to act in regard to selling the property a commission charge of 1.5% (vat included) of the
sale price will be charged. Following a successful sale this amount will be payable to [management company] within 7 days of
completion of contracts.

I'm not sure what "act in regard to selling" covers. Perhaps dealing with the entire sales process (offering to tenants), getting estate agent quotes, dealing with estate agents, solicitors etc. Or if this would also cover simply asking the tenants if they want first refusal.

I have sent the management company an email asking them to clarify.

The_Logans wrote: »

We sold our previous rental property to our tenants. It was a bloody nightmare! They had expressed interest previously, so when it came time to sell it we gave them first refusal. We got prices from different EAs, agreed on the middle value and went from there. It took ages, and they kept finding reasons to delay and knock the price down. They really had us over a barrel.

That's interesting. I suppose this could happen when selling to anyone though?

[Deleted User]

BlaEm wrote: »

Do you have a good / direct relationship with them? Have they ever mentioned an interest in buying your property?

If they've never expressed such an interest, then you need to approach carefully - they may be worried that if they don't take you up they'll be faced with an eviction, if you then wanted to sell to a third party with vacant possession.

First thoughts are - you will still need to agree on a value, so as a first step still approach 3+ Agents to conduct a valuation. You can use this to negotiate with your tenants.

The property is managed, so I have no relationship with the tenants.

If they don't want to buy the property, I'll be placing it on the market.

I have 4 valuations now, and the property is managed, so I have asked the management company what their terms are regarding selling to tenants.

harrys_dad

G_M wrote: »

If you used an agent to find and/or manage the tenants, then read your contract with the agent.

You may have to pay them a sales commission.

Wow, I finally managed to make a point before the same one was made by G_M confirming I was right

Rain_Shadow

harrys_dad wrote: »

Wow, I finally managed to make a point before the same one was made by G_M confirming I was right

Luck. .

The_Logans

[quote=[Deleted User];72147469]



That's interesting. I suppose this could happen when selling to anyone though?[/QUOTE]


True, but when it happens when house is on the open market you probably have the benefit of other interested parties. Because we gave them first refusal it never went on the market, and once they had said they did want to buy it we felt that putting it on the market after that would be quite confrontational and they would make it virtually impossible to take photos, do viewings etc.

GDB2222

kinger101 wrote: »

I think there was a case involving Foxtons where a judge decided a clause demanding money for selling a property for a tenant was unfair.

EDIT: Update to the above;

http://www.bailii.org/ew/cases/EWHC/Ch/2009/1681.html

Read 102-105 in particular.

Seems a sales commission within a letting contract would be regarded as an unfair term.

That case was decided on the basis of the Foxtons terms and conditions, which were quite lengthy. The same term highlighted clearly in a short engagement letter might scrape through.

davidmcn

[quote=[Deleted User];72147469]I'm not sure what "act in regard to selling" covers.[/QUOTE]
I would have thought "acting as your selling agents"? I don't know if that's the sort of thing they typically do, but presumably they're capable of it?

kinger101

GDB2222 wrote: »

That case was decided on the basis of the Foxtons terms and conditions, which were quite lengthy. The same term highlighted clearly in a short engagement letter might scrape through.

Based on what has been posted for this contract, it seems it's up to LL whether they want them to be EA.

The part of the Foxtons' case relating to selling fees wasn't due to the length to the T&C, but more due to the imbalance;

(a) agent wasn't actually doing anything;
(b) in the Foxtons's case, it was either due without completion.

Sees blanket entitlement to fees could still involve the agent doing nothing.

Cakeguts

What we did was put the house on the open market and the tenants made an offer which we accepted. Sale went through without any problem. Didn't give first refusal just put the house on the market.

ThePants999

If you want to sell to anyone else, you either have to evict your tenants, or severely restrict your potential market. That, by itself, is the key reason landlords often like to sell to their tenants!