Purchasing A Property With Sitting Tenants

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    Purchasing A Property With Sitting Tenants


    Hi All,


    NB: The tenants described below have just moved into the property
    in question and I am not entirely sure if that makes them "Sitting Tenants".


    Okay then, here goes.

    I am in the process of purchasing the bottom maisonette of a detached
    house which is split into two levels of which I own the top section.
    My motivation for this purchase is purely based on the fact that I believe
    it will subsequently put me in a good position to purchase the entire freehold
    for both properties, from our landlord.

    With literally days for the sale to be completed and contracts exchanged,
    the vendor decided to rent out his maisonette to new tenants, to enable
    him cover his mortgage payments. The tenants have since moved in.

    I've been extremely unhappy about this and must admit, have considered
    pulling out of the whole deal entirely, as I have only recently been involved
    in a very lengthy eviction process with a tenant at my other property.
    Ironically, the vendor announced his plan to rent his property within an hour
    of me returning from the county court where I was awarded possession of
    the other house.

    It was my wish to fully refurbish the empty maisonette, once purchase was
    completed, before letting it out. With tenants having now moved in, my plans
    look threatened and it appears the only way I can carry out the required
    work will be to evict them after the initial six months. I am informed by the
    letting agent they are on an AST but have no proof of this.

    I have a number of concerns about purchasing this property with sitting
    tenants and would be grateful if you could assist with the following queries.



    Question 1:
    Due to the problems I've had with my other tenant, I would definitely like to
    bring in my own tenants to this new property after the initial 6 months,
    through the help of a network of friends and family.

    How easy will it be to evict these new tenants after the statutory AST 6
    month period, in order to refurbish the property?


    Question 2:
    As the new owner of the property, will I be bound by the terms and
    conditions of the existing tenancy agreement signed between the vendor
    and the tenants?


    Question 3:
    Am I legally permitted to make changes to the existing tenancy agreement
    once I become the new landlord, particularly on issues such as damage
    deposits?


    Question 4:
    I had informed my mortgage lender I expected to achieve a higher rental
    income than what I am told the new tenants are paying. The rental factor
    also played a huge part in my decision to purchase the property. Can I
    increase the rent when I become the new owner and when can I do this?


    Question 5:
    Is there a checklist of things I need to look out for or insist on, from the
    vendor, tenants and letting agents, before I complete this purchase?


    I would be extremely grateful for your kind response to the above queries
    and would also welcome any other useful tips before taking on this thankless
    task.


    Thank you


    RM
    Last edited by Hitman; 28-01-2007, 13:28 PM.

    #2
    Sitting Tenants

    You wish to purchase the bottom flat to put to your own upper flat which will give you control of the whole - seems to make sense.
    The flat has recently been let out to a new tenant - traditionally the term "sitting tenant" means a Rent Act tenant - virtually un-movable - not the case here.
    It is highly unlikely these tenants are anything other than AST tenants, but you need to get your solicitor to make absolutely sure by checking the agreement before contracts are exchanged. There's just a slim chance they could be assured tenants.
    There's no reason why you should need to change the tenants if they turn out to be OK. In fact, friends and family can often turn out to the the worst nightmare tenants!
    If you want to up the rent it easiest to wait for renewal time and then offer them a new tenancy on the higher rent or to leave.
    Just common sense things to check before purchase: proper agreement in place, checked by your solicitor, proof of regular rent payments and no ongoing disputes, no neighbour problems, which you should be aware of living above, transfer of any deposit.

    Comment


      #3
      Vacant Possession

      What are the terms of the contract with the vendor. Most contracts call for Vacant Possession. Which means just that, the property must be vacant.

      Not sure what your position is if the proerty is not vacant, but you should have redress.

      Comment


        #4
        Check this with your lawyer.

        Rent issues from the land through the tenant moreover, it is in the absolute ownership of the tenant until such time as it is due for payment such payment must be made to the legal landlord or his lawfully appointed agent i.e. The person with whom you have an agreement. In other words make sure you have the tenants agreement conveyed with the title, or you might find you don't have one.
        In other words rent is an interest in land.

        s 40(1) L.P.A now s.2 1989 the statue requires all the terms of the agreement to be on one document.
        Part performance does not apply.

        Comment


          #5
          After completing purchase of property subject to an existing lease or tenancy, new L has to notify T of changeover: serve old L's letter of authority with Notices required by s.3 of LTA 1985 and s.48 of LTA 1987. This applies to all residential units, whether T is a long-leaseholder or a short-term tenant (eg under Housing Act 1988/Rent Act 1977); similar but non-statutory Notices are desirable for commercial properties too..
          JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
          1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
          2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
          3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
          4. *- Contact info: click on my name (blue-highlight link).

          Comment


            #6
            I think if were purchasing a revisionary interest in land i would get the tenants consent first. Are you thinking of a contract by novation?

            Comment


              #7
              Originally posted by bill65 View Post
              I think if were purchasing a revisionary interest in land i would get the tenants consent first. Are you thinking of a contract by novation?
              No. Novation replaces old contract/lease with a new one; acquiring a landlord's interest simply changes T's immediate reversioner. T's consent not necesary as T unaffected otherwise; only exception is f/r on block of flats, when collective leaseholders have statutory right of first refusal.
              JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
              1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
              2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
              3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
              4. *- Contact info: click on my name (blue-highlight link).

              Comment


                #8
                Strange a contract without agreement. Explain what would happen if the tenant refused to pay rent, I can't see you get to court with an agreement with someone else. As I'm sure you may know, if you are not legally in possession of the rent your are not in possession of the revisionary interest.

                Comment


                  #9
                  Originally posted by bill65 View Post
                  Strange a contract without agreement. Explain what would happen if the tenant refused to pay rent, I can't see you get to court with an agreement with someone else. As I'm sure you may know, if you are not legally in possession of the rent your are not in possession of the revisionary interest.
                  L1 grants lease to T1.
                  L1 sells reversion to L2.
                  L2 becomes landlord of T1.
                  Both are in possession- T1 in actual occupation; L2 receiving rents and profits.
                  What's so strange?
                  JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                  1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                  2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                  3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                  4. *- Contact info: click on my name (blue-highlight link).

                  Comment


                    #10
                    I'm thinking. If the landlord give notice to tenant that they are selling, before contracts are exchanged and the tenant stays silent on the matter, that could be accepted as consent.
                    However, If someone came to ask me for rent saying they are the new landlord I would congratulate them, and tell them, see you in court, thats if they get there without a contract with me.
                    Have a read s.2 L.P.A 1989
                    Rent is an interest in land a demand for rent is unenforceable by action in a court unless that consent has been reduced to writing and signed by the party to be charged.

                    Comment


                      #11
                      Originally posted by bill65 View Post
                      I'm thinking. If the landlord give notice to tenant that they are selling, before contracts are exchanged and the tenant stays silent on the matter, that could be accepted as consent.
                      However, If someone came to ask me for rent saying they are the new landlord I would congratulate them, and tell them, see you in court, thats if they get there without a contract with me.
                      Have a read s.2 L.P.A 1989
                      Rent is an interest in land a demand for rent is unenforceable by action in a court unless that consent has been reduced to writing and signed by the party to be charged.
                      You are wrong, sad to say. LPA 1989 irrelevant. Rent is not an interest in land but simply an incident of L's reversion.

                      If someone comes to ask you for rent, following service of LTA Notices and holding old L's written authority, you have to pay. When they see you in court, you'll learn that I was right all along...
                      Last edited by jeffrey; 31-01-2007, 10:25 AM.
                      JEFFREY SHAW, solicitor [and Topic Expert], Nether Edge Law*
                      1. Public advice is believed accurate, but I accept no legal responsibility except to direct-paying private clients.
                      2. Telephone advice: see http://www.landlordzone.co.uk/forums/showthread.php?t=34638.
                      3. For paid advice about conveyancing/leaseholds/L&T, contact me* and become a private client.
                      4. *- Contact info: click on my name (blue-highlight link).

                      Comment


                        #12
                        That is correct Jeffrey. Have bought properties with tenants in situ many times. I always make sure they get my details (S48) and letter of authority from old landlord et voila!!!

                        Comment


                          #13
                          Point taken, but i will still cite S.40 & S2 L.P.A, by way of a defense, but I enjoy arguing any way.
                          I still think It is a good idea to write to the tenant informing them of the pending disposition. Are not contracts freely entered into, something known as freedom of contract.

                          Comment


                            #14
                            You can argue all you like but as long as proper S48 notices served and letter of authority from old landlord received you will have to pay.

                            As a matter of interest, if something needed repairing at the property, who do you think you would be chasing to do the repairs? That's right, the new landlord.

                            Also, if the new landlord gave you properly served notice requiring possession, do you think you would not be eventually evicted?

                            The tenant in an AST has no input into landlord selling on etc. However, a decent landlord would visit the tenant and explain what was happening.

                            Comment


                              #15
                              It is not my intention to take the discussion to a different level but, is not a S48 and landlord letter of authority, an implied contract by novation and therefore void ab initio.I did not give my authority for my interest in land to be disposed of .
                              As to repairs I shall do those myself with the prospect of claiming title in 12 years.

                              Comment

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