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sold subject to future tenancy

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sold subject to future tenancy

Postby caffiene » Tue May 23, 2017 2:53 pm

When a property is sold subject to an existing tenancy, my understanding is that the buyer takes the property subject to the associated risks and responsibilities and benefit of the rental income in place of the seller.

Are there any special considerations if a new tenancy agreement has been signed in advance of a moving in date? e.g. at some point after exchange of contracts, there will be a handover with current T leaving and new T moving in.

If the buyer is notified of this arrangement and proceeds, can he sue the seller if something goes wrong e.g. current tenants refuse to leave and new tenants cannot move in?
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Re: sold subject to future tenancy

Postby atticus » Tue May 23, 2017 3:24 pm

That would depend on the terms if the sale contract. A seller would be unwise to guarantee something he cannot be certain will happen.
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Re: sold subject to future tenancy

Postby caffiene » Tue May 23, 2017 10:14 pm

Thanks, that answers my question.
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Re: sold subject to future tenancy

Postby dls » Wed May 24, 2017 5:27 am

In such a situation, a much more detailed contract is needed to cope with the possibilities.

It depends primarily on what combinations the seller wants to promise and what the buyer wants to be sure of.

The agreement for a future tenancy may face enforcability issues unless by deed.
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Re: sold subject to future tenancy

Postby theycantdothat » Thu May 25, 2017 9:21 am

A full answer depends on taking into account all the possible permutations.

The short answer to the specific question asked is: Probably not. If the seller has made a full disclosure it is difficult to see a cause of action against the seller. However, assuming nothing unusual, it is also difficult to see how a "tenant" with an agreement for a future tenancy who has failed to protect it can have a claim against a buyer.

In practice, where property belonging to A is let to B and A has agreed a future tenancy with C, A is unwise to sell and X unwise to buy. A (who has of course already been unwise in agreeing the new tenancy with C before B vacated) is unwise to sell because he loses complete control of the situation. X is unwise to buy because the position is messy. In a commercial situation it may be worth having a contract between A and X with B and C joining in, but if we are talking about a buy-to-let it will not be worth the hassle.
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Re: sold subject to future tenancy

Postby dls » Thu May 25, 2017 11:59 am

As usual - I'm with TCDT
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