Legal obligations towards new tenants on sale of property

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    Legal obligations towards new tenants on sale of property

    I am selling a flat which is currently let to 2 students.
    There is also a new tenancy agreement (to new tenants) signed up to start on 15 July
    The flat has been marketed with this specific information included.

    The buyer has now informed me that he wants to complete the sale at the end of the current tenancy (ends 31st June) with vacant possession
    Putting aside my moral obligations, what would be the legal implications for me or the new buyer if we were to complete the sale on the 1st July and then the new buyer tore up the AST (signed by me as owner/LL) for the new tenants (due to move in on 15th July)

    From a moral perspective Im inclined to back out of the sale now but I just wondered if any experts on here had an opinion on the legal implications.

    #2
    One or both of you will be in breach of contract, so damages for breach of contract etc.
    I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

    I do not answer questions through private messages which should be posted publicly on the forum.

    Comment


      #3
      As I understand it, you would be in breach of contract as you have contracted to lett a property and you won't be in a position to supply it.

      You would be liable for to compensate the tenants for any costs arising from the breach of contract.

      The purchaser doesn't acquire the responsibility for the new agreement as they would if the tenancy was an existing tenancy at the date of completion.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        You'd be aware students don't have to leave. Probably will leave, but entitled to continue as periodic.

        In your shoes I'd cancel sale as no achievable, get vacant possession, the remarket. Probably/hopefully get a better price.
        I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

        Comment


          #5
          As a rule, tenanted properties are sold cheaper than properties with vacant possession.
          I'd tell the purchaser they'll have to pay an adjusted price if they want to change the rules, and I'd probably try and buy the new tenants out of their contract with the additional funds.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            This is a good example of why it's a bad idea to sign the TA so far in advance imo. Holding deposits were invented for this purpose so why not use them to reserve the property for the tenant?

            Comment


              #7
              Payment of a deposit on its own will not secure the tenancy against a buyer who has no notice of the agreement. It needs to be entered on the register or registered as a land charge if the property is unregistered.

              Comment


                #8
                Thanks for all advice.
                There is a signed tenancy agreement and deposit has been paid and protected.

                My solicitor is considering how to include a clause in the contract of sale which commits the buyer to honouring the new tenancy and indemnifying me from breach of contract claims should he attempt to cancel the new tenancy after completion of the sale..
                If buyer is not prepared to agree to the contract terms - I'll walk away.

                Incidentally - its common practise here to arrange student tenancies up to 8 months in advance. Crazy I know but if you don't go with the flow, you miss the early birds !

                Thanks again to all who responded.

                Comment


                  #9
                  I am in the process of signing my daughter's guarantor agreement for her tenancy commencing July (and she is late in geting this sorted). If you think he may try to get out of the tenancy then what about the people who are living there and will not then be able to find a new house? You would be better to ask them now if they would consider another property - find one for them. It could be my daughter on a hospital placement as a Midwife suddenly in a battle with the LL to keep her home. It would not be fair (even if you were "indemnified" from breach of contract claims)
                  Unshackled by the chains of idle vanity, A modest manatee, that's me

                  Comment


                    #10
                    Originally posted by Affinite View Post
                    I am selling a flat which is currently let to 2 students.
                    There is also a new tenancy agreement (to new tenants) signed up to start on 15 July
                    Either it's a coincidence with the dates, which it could be being a student let, or we may also have one of the tenants on a seperate thread?
                    https://forums.landlordzone.co.uk/fo...ty#post1150322

                    Comment


                      #11
                      spammer
                      Why on earth would a chartered surveyor be of any use?
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        Originally posted by Affinite View Post
                        Incidentally - its common practise here to arrange student tenancies up to 8 months in advance. Crazy I know but if you don't go with the flow, you miss the early birds !
                        Yes, that's not uncommon. It was 5 months in advance when I was a student landlord. However, that doesn't mean you have to sign the tenancy agreement then. You just take a holding deposit to reserve the property for the students. Contracting with someone 8 months before the event is madness when anything can happen to either side in the intervening period. As in this case.

                        Comment


                          #13
                          It's been a while, but as a student I would expect to sign and have a signed contract in place several months in advance, not just paid a holding deposit. Holding deposit wouldn't assure me that I have a place to live next year, the landlord can just change their mind and return the holding deposit. And from the landlord who specialise in student let in popular student renting location's point of view, the student changes their mind and give up a week deposit and you're stuffed.

                          And that's not even considering Tenant Fees Act limit on how long you can hold onto the holding deposit.

                          The whole student letting market is a strange breast. Everyone just work on the basis that security of tenure doesn't exist and that tenant will leave when their fixed term end corresponding to academic year, and sign new contract with next year tenant on that basis.
                          I am not a lawyer, nor am I licensed to provide any regulated advice. None of my posts should be treated as legal or financial advice.

                          I do not answer questions through private messages which should be posted publicly on the forum.

                          Comment


                            #14
                            Yes it is a strange beast and much of it works on trust and assumptions. I hear what you're saying KTC about confidence, but its s big risk for both parties to sign a contract that early. Before the students have even taken the exams that will determine their college place. I had many students over a period of 8 years and actually didn't even take holding deposits. Luckily I had no tenants staying past their academic year either, although I understand it does happen.

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