AST In Property Title

bubby08

Hello guys,

I was looking at a property and can’t seem to get a straight answer from the agent, so before I pay a conveyancer I was wondering if anyone understands this potential problem.

The owner has several properties however in this one he currently has tennants, rather than give the tennants notice they have a AST agreement and this is reference on the property Title, the agent said they be given notice whenever whoever the purchaser decides so, however this seems strange that the owner wouldn’t have issued notice and has passed the problem to the purchaser and also there is legal speak regarding this AST in the title.

Any ideas how problematic this situation could be?

Best Regards 

user1977

Any chance of telling us what the "legal speak" actually says?

In any event, you probably don't want to spend too much time or money on this until the tenants have gone.

gwynlas

He is either selling it as an investment property with tenants in situ or he will need the tenants to move out prior to exchange so you have vacant possession. Given how long sales are taking these days he would be reluctant to possibly lose six months rent. Ask the agent for clarity before engaging a convetancer, it might be that the tenants have already made plans to move on.

propertyrental

An AST would not be registered on the property title.

Please quote exact wording, plus where exactly it appears.

But the bottom line is it can take months and months to evict tenants, so don't spend a penny on legals, survey, mortgage application etc until you have confirmed that

a) the tenants have left

b) the property is empty and

c) the tenancy has ended (not the same as tenants have left!)

Bookworm105

so the owner is selling a property currently occupied by their tenants under an Assured Shorthold Tenancy (AST)

nothing particularly special about that. 
the landlord (LL) has not yet commenced eviction proceedings against the tenant, so ...

either the LL is marketing the property without vacant possession, meaning it can only be purchased by another landlord (using a buy to let mortgage) or a cash buyer (who does not require a residential mortgage). Whether the new owner subsequently seeks to evict the existing tenants is then a matter for the new owner to decide.

or the LL is gambling that once a buyer has shown interest in the property then the LL can start eviction and will successfully have removed their tenants before completion date and so will offer the property with vacant possession. That is a huge gamble for the LL as the contract for sale will be conditional on vacant possession, and so failure to deliver that triggers penalties for the LL. Also it is huge gamble for buyer because tenants may drag out the process meaning the buyer's mortgage offer may run out of time and need to be renegotiated 

the scenario you paint is fairly common,  the LL is seeking to have their cake and eat it, ie receive rent up until sale completion often because they have a mortgage to pay from that rent so cannot afford to have the property empty before sale.
As a buyer of a property you wish to live in from completion day, it is best to avoid such scenarios and look only at properties where vacant possession is a lot more certain.

bubby08

Hi there,

please see below

11

Additional provisions   11.1​The parties agree and declare that they do not intend that any of the terms of this transfer will be enforceable by virtue of the Contracts (Rights of Third Parties) Act 1999 by any person not a party to it   11.2​The Transferee hereby covenants with the Transferor that the Transferee will henceforth observeand perform all the covenants on the part of the landlord, whether express or implied, as are contained, mentioned or referred to in the Assured Shorthold Tenancy of the Property dated [​] and made between LL (1) and TENNANT (2) and every document varying or supplemental or collateral to it and every licence or consent granted under such tenancyand will indemnify the Transferor in respect of any future breach non-performance or non-observance thereof   11.3​It is hereby acknowledged that the covenants implied by the Transferor and the Transferee transferring with full title guarantee shall be modified to the effect that the covenants set out in Section 2(1)(b) of the Act shall be modified so that the words “at its own cost” shall be substituted with “at the Transferee’s cost” and that the covenants set out in Section 3(1) of the Act shall not extend to any charge, encumbrance or other right which pre-dates this Transfer and shall be modified by the deletion of the words “and could not reasonably be expected to”   11.4​The Transferee hereby covenants with the Transferor by way of indemnity only to observe and perform the covenants stipulations and obligations contained mentioned or referred to in the Property Register and Charges Register and to indemnify and to keep the Transferor fully and effectually indemnified against all future liability of whatsoever nature arising out of any breach non-observance or non-performance of the same

bubby08

Any ideas?

thanks

BarelySentientAI

That looks like it's from the draft contract rather than the title - and basically says that you will become the Landlord and do everything that the landlord has to do according to the AST.

user1977

Or perhaps from the previous sale and is the current landlord undertaking to the previous one that they’ll do so. In any event it doesn’t change anything from your point of view, assuming the tenancy ends before you buy.

Bookworm105

bubby08 said:

Any ideas?

thanks

what do you not understand about the 2 positions I explained?
The property is being sold with tenants in situ, the new owner will be the new landlord.
if you think you are buying a home to live in yourself then either you or the EA are totally mistaken as to your circumstances.

bubby08

No not at all, I was just seeking clarity that this draft in the title doesn’t give the tenants any kind of permanency to reside irrespective of if the property owenership changes. i am weary because I have never come across a scenario where a current LL doesn't service notice to his tenants and certainly not where a new owner (eg. Me) inherits the tennants and this fact is included in the register. 

So in conclusion this wording doesn’t ensure that the tenants have a permanent right to reside and i can give notice upon taking ownership and this statement can easily be removed from the register??

thank you