Buying with 'vacant possession on completion' any potential problems?

Yellowstone2 · 15 November 2022 at 1:08AM

Looking at an apartment thats currently for sale. Two almost identical came on the market the same day, although it didn't say, it looked like a landlord selling both. I asked the EA for clarification. They said there were tenants in both, but that the tenants are aware the properties are for sale. EA says the landlord would give the tenants notice to move out on completion.

I suspect the listing doesn't specify sale is with tenant in situ, or vacant possession on completion in order to possibly to appeal to a wider buyers market, but it did concern me a little.

What would happen if, come completion day the tenant dug their heels in and doesn't moved out. Would the vendor be in breach of the sale contract of 'sold with vacant posession' or would the tenant become the responsibility of the new owner?

What would happen if the tenant did leave, but left the apartment in a poor condition, or didn't leave the things specified in the fixtures and fittings? (for example if the fridgefreezer and washer/dryer belong to the landlord and are agreed as included in the purchase price, but the tenant takes them when they move out?

Not experienced with this kind of purchase, so want to check if it's really not a big deal, or if to not touch it with a barge pole!

user1977 · 15 November 2022 at 1:19AM

In practice, if the tenants haven't left on the completion day then completion won't happen and the vendor would be in breach of contract. General advice is not to exchange (or even progress the transaction much) until you know the property is vacant.

Jonboy_1984 · 15 November 2022 at 7:15AM

We bought a house on that basis earlier this year. The tenants were aware and had made the place spotless for the viewing days and made all the right signals.

We had pushed on with the legals, surveys etc and got everything ready for the date they were due to leave so we could exchange straight after.

The day before they were due to leave they announced their onward rental had fallen through and they were going nowhere….They took almost a month to secure something else and stopped communication with everyone for much of that time, which was pretty stressful...

housebuyer143 · 15 November 2022 at 8:12AM

What you do is refuse to exchange until the tenants have gone and you have been in the house to confirm they are no longer there.
If you exchange with them in the property and they then don't leave they are your responsibility so don't put yourself in that position.

eddddy · 15 November 2022 at 9:01AM

housebuyer143 said:

If you exchange with them in the property and they then don't leave they are your responsibility so don't put yourself in that position.

That's not how it would work.

As mentioned above, it the tenants haven't left on completion day, then the buyer tells their solicitor and completion doesn't happen. The seller is in breach of contract. The seller is still responsible for the tenants. The seller would be liable to pay the buyer compensation for their resulting losses.

i.e. The seller is probably taking a bigger risk than the buyer.

For that reason, the seller's solicitor will very, very strongly advise the seller not to exchange contracts until the tenants have moved out. (But I guess it's possible that a daft seller might try to ignore their solicitor's advice.)

housebuyer143 · 15 November 2022 at 9:33AM

eddddy said:

housebuyer143 said:

If you exchange with them in the property and they then don't leave they are your responsibility so don't put yourself in that position.

That's not how it would work.

As mentioned above, it the tenants haven't left on completion day, then the buyer tells their solicitor and completion doesn't happen. The seller is in breach of contract. The seller is still responsible for the tenants. The seller would be liable to pay the buyer compensation for their resulting losses.

i.e. The seller is probably taking a bigger risk than the buyer.

For that reason, the seller's solicitor will very, very strongly advise the seller not to exchange contracts until the tenants have moved out. (But I guess it's possible that a daft seller might try to ignore their solicitor's advice.)

But if you exchange you are taking on the property in the condition it was at exchange which the buyer has no idea about until they go and see if.

It's safer to not exchange until you have been in. Saw a post on here recently about this exact thing and they exchanged, tenants didn't leave then seller lied and said tenants had left so completion happened and they were still there.
Yes, you can sue seller for costs but why put yourself in that position in the first place.

Ath_Wat · 15 November 2022 at 9:43AM

If the vendor is under the impression that they can leave the tenants in situ until the very last moment, don't touch it with a bargepole if you can avoid it. Just walk away. They will be a nightmare to deal with.

If it really is a house you feel you have to buy, then tell them you will commence proceedings as soon as the tenants are out. Until they are out, spend no money. And be prepared to wait a long time.

74jax · 15 November 2022 at 9:43AM

'Usually' when you complete, the property should be as it was at Exchange.

At Exchange, or as close too, you visit the property for a final look. If happy, confirm to your solicitor to go ahead with the Exchange.

If you Exchange on the 'promise' of something, you're taking a risk on someone you don't know following through with their promise.

One option is to not post out until the tenants have gone, but that could be months down the line and impractical. Personally I'd keep looking until the tenant moved out.

user1977 · 15 November 2022 at 10:36AM

housebuyer143 said:

eddddy said:

housebuyer143 said:

If you exchange with them in the property and they then don't leave they are your responsibility so don't put yourself in that position.

That's not how it would work.

As mentioned above, it the tenants haven't left on completion day, then the buyer tells their solicitor and completion doesn't happen. The seller is in breach of contract. The seller is still responsible for the tenants. The seller would be liable to pay the buyer compensation for their resulting losses.

i.e. The seller is probably taking a bigger risk than the buyer.

For that reason, the seller's solicitor will very, very strongly advise the seller not to exchange contracts until the tenants have moved out. (But I guess it's possible that a daft seller might try to ignore their solicitor's advice.)

Saw a post on here recently about this exact thing and they exchanged, tenants didn't leave then seller lied and said tenants had left so completion happened and they were still there.

Yes, but that's an unusual case, not a typical one. As I said above, in reality I wouldn't expect completion to happen until vacant possession is achieved.

propertyrental · 15 November 2022 at 10:51AM

housebuyer143 said:

eddddy said:

housebuyer143 said:

If you exchange with them in the property and they then don't leave they are your responsibility so don't put yourself in that position.

That's not how it would work.

As mentioned above, it the tenants haven't left on completion day, then the buyer tells their solicitor and completion doesn't happen. The seller is in breach of contract. The seller is still responsible for the tenants. The seller would be liable to pay the buyer compensation for their resulting losses.

i.e. The seller is probably taking a bigger risk than the buyer.

For that reason, the seller's solicitor will very, very strongly advise the seller not to exchange contracts until the tenants have moved out. (But I guess it's possible that a daft seller might try to ignore their solicitor's advice.)

But if you exchange you are taking on the property in the condition it was at exchange which the buyer has no idea about until they go and see if.

That is certainly one aspect of the contract.
But equally the contract will specify 'vacant possession' (unless buyer actually wants tenants!) so if the seller does not provide the property vacant on Completion then there's a breach of contract. Completion won't happen and seller is liable for (many) costs.

But that's not much help if you are sitting outside with all your worldly belongings in a removals van!

This seller is hoping to continue collecting rent up to the last minute, but at the risk that the Ts don't leave.

Don't spend/waste money on survey, legals etc until the property is empty.

SusieT · 15 November 2022 at 10:51AM

I would suggest that you insist that the tenants move out prior to exchange of contracts and that before exchange you visit again to make sure that at that point the apartment is in an acceptable condition (a few tenants will leave things they do not want any more, especially if a house is being sold) and that items that are included are still there. Landlord should have had time to make sure it is in a good clean condition prior to exchange, but you do need to remember that some rentals will look more tired when they are emptied than some may expect, although this is also true of many non rentals as well.

Buying with 'vacant possession on completion' any potential problems?

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