House buying question

davidmcn

eddddy wrote: »

(Realistically, the seller would be taking a much bigger risk than the buyer, if they exchanged contracts with the tenants in-situ.)

Yes, I think people here tend to forget that contractually this is the seller's risk and they'd be in breach of contract if the property is still occupied by their tenants (or by themselves, or by their disgruntled spouse or their grumpy teenager). The buyer can sit tight with their money until vacant possession is available. Obviously though a practical hassle if you're in a removal van at that point, but for some buyers not so much of a problem.

Not sure if anyone has statistics for what proportion of tenants don't leave when expected to?

AnotherJoe

100% of those looking for social housing. If "expected to" means the date the section 21 says

BohemianRhapsody

Again, many thanks for your input. May I ask those who mentioned that it's actually a more of a risk for the seller than the buyer, to elaborate on it please?

We had a further chat with the EA. Now he is saying that the vendor might consider to issue section 21 as soon as a the buyer has started to spend some money on the purchase, i.e. mortgage application, survey, searches etc. to show commitment.

They have been renting for 7 months and apparently told the agent that they are of course not happy to move again but that they don't have a choice and are planning to leave at the end of July after the school finishes . I feel for the tenants as they have 4 kids and it must be real pain to uproot again.

From what we have seen about the tenants, it's definitely not a family seeking social housing. The rent for that house is not cheap as a very popular area and they look like their lifestyle is of professional couple from the photos and other things inside the house, i.e. photos from expensive overseas holidays etc. They have also been very accommodating re the viewings despite being a family of 6. My gut feeling says that they would not refuse to leave, the question is that it might drag on for a bit longer until they find a suitable rental accommodation to move in to.

That all said, we will of course continue to look for other properties as realise that this might not be straightforward. I am also going to speak to our solicitor next week to get a better understanding re the legal aspect.

AnotherJoe

It's more of a financial risk for this seller. But that doesn't help you especially with school catchment and dates to be met. Do you want to get embroiled in a legal case even if you'd wIn ?

Of course you could take a chance and it might go swimmingly. Or the well off renters might decide they have the vendor in a vulnerable position and make all sorts of demands he balks at and it all goes pear shaped


Or the LL might decide that now "you've spent money on mortgage application, survey, searches etc. to show commitment" you are locked in, wont want to back out and he'll chance it with his original plan, a Section 21 at exchange.

Tiglet2

The seller will have to disclose in the Property Information Form whether or not the property is being sold with vacant possession.

If the seller states vacant possession then your solicitor will not exchange until the property is empty. If the seller states that tenants are in situ, then your solicitor will want to know if you're buying the property as an investment. Since you are not an investor and do intend to live in the property, your solicitor will not exchange until the property is empty.

The tenants may leave at the end of the two months notice, or they may not. Evicting tenants through the courts can take around 9 months.

You would need to inspect the property once it is vacant to check that there is no damage caused by the tenants.

Tiglet2

The seller takes a risk because
(a) he has decided to sell the property and knows that issuing a Section 21 notice too early (and the tenants do leave at the end of the notice period) might mean that the property is empty earlier than anticipated resulting in no rental income (and very likely a mortgage/utilities/council tax still to pay).
(b) The seller issues a Section 21 notice and the tenants decide not to leave at the end of the notice period and the seller has to evict the tenants via the court and bailiffs, so extra expense and possibility that the tenants will trash the property out of spite. Meanwhile, the potential buyer has got fed up waiting and decides to buy another property.

GrumpyDil

Interesting reading here. Agree that the if the seller exchanges and then fails to provide vacant possession at completion they would be liable for damages etc.

In some cases of course this might not be an issue for buyers where e.g the buyers are able to stay where they are whilst issues around the tenants are sorted but in OP's case they are selling their existing home.

Yes the seller would be liable to pay any losses arising from failing to complete and that would include any claim from their buyer but that's certainly hassle that most people would like to avoid.

If OP really wants to continue with this purchase, then my suggestion would be to tell the seller that they will exchange and complete on the same day. If the landlord is not willing to give notice until exchange my answer would be to walk away.

Tiglet

Whilst i'd walk away here what evidence do you have that the solicitor would not agree to exchange in such circumstances? I would expect them to discuss the risks but as has previously been mentioned vacant possession needs to be given at completion and not exchange. Also the solicitor works for their clients and it would be perfectly reasonable for the client to say thanks for warning me of the risk but I want to exchange and accept the risk that we may not be able to complete without vacant possession.

eddddy

GrumpyDil wrote: »

Tiglet

Whilst i'd walk away here what evidence do you have that the solicitor would not agree to exchange in such circumstances?

As you suggest, if the solicitor was aware that there were tenants in the property, the solicitors should advise the buyer of the risks, and would probably advise against exchange of contracts.

But it would by up to the buyer whether they chose to exchange contracts or not.

(Some buyers might be happy with the fall-back option of claiming damages, if completion is delayed because the tenants don't move out - for example if it's an investment property.)

Tiglet2

GrumpyDil, if the client insists on exchange without the property being vacant, then the solicitor may have to adhere to the client's wishes, particularly if it is a cash purchase (solicitor would report this to the lender if a mortgage is needed and lender may withdraw the offer), however they would not do so without a waiver being signed by the client to accept the risks without recourse to the solicitor should it go wrong.

I am a legal conveyancing assistant (not yet qualified) and the solicitor I work for would not exchange without the property being vacant, because once exchange has taken place, the buyer's solicitor would no longer have any leverage over how long it would take to obtain vacant possession.

davidmcn

Tiglet2 wrote: »

they would not do so without a waiver being signed by the client to accept the risks without recourse to the solicitor should it go wrong.

I am a legal conveyancing assistant (not yet qualified) and the solicitor I work for would not exchange without the property being vacant

It's commonplace for clients to instruct clients to do things against their solicitors' advice. Getting a waiver signed seems a bit OTT, but the solicitor would certainly want something on file making clear what their advice and the instructions were.

solicitor would report this to the lender if a mortgage is needed and lender may withdraw the offer

It is of course pretty normal for properties not to be vacant at the time of exchange and I've never encountered a lender which cares about that or would "withdraw" their offer. They obviously won't allow their funds to be used if the property isn't vacant at completion. How it becomes vacant is everybody else's problem.