Buying a house that's being rented

kandr10

Do people see it as a big risk to buy a house that is currently being rented? Estate agent has said there is an agreement that a months notice will be given once contracts are signed. what would standard practice be in this scenario? Has any come up against it before?

FortySeven

Bought my house while tenants in. Made it clear I wanted vacant possession when contracts were signed and this was adhered to. Very smooth transaction. No issues with it.

Butters1979

Are you cash buyer or mortgage? Banks would usually want vacant possession before approving the purchase.
Usually there would not be a problem but how sure are you that the tenant will leave without hassle?

There was a thread on here a few months back, where a guy was buying an apartment that was supposed to be empty, however on the day of closing he found out the tenant had refused to vacate the property and was fighting the eviction. It was a complete mess.

Personally I would not sign a contract when there is a sitting tenant.

kandr10

Thanks for your replies. I was afraid of a scenario where the renters would refuse. I don't know what kind of agreement they reached or whether they would honour it. It's a gamble I guess!
It's a cash purchase alright.

JimmyMW

kandr10 wrote: »

Thanks for your replies. I was afraid of a scenario where the renters would refuse. I don't know what kind of agreement they reached or whether they would honour it. It's a gamble I guess!
It's a cash purchase alright.

I wonder if you agreed to pay the months rent if the purchase is complete within a month after contracts are signed with it vacant, would it be enough of an incentive for the seller to have it vacant at the point of signing the contracts?

The reality is that most other purchasers will be requiring a mortgage and therefore would need it vacant at the point of signing the contracts anyway so the seller would not have much of a choice IMHO

Butters1979

It sounds like the vendor is putting you at risk by being greedy, I'd insist on a vacant property before signing anything.

FortySeven

99% of people are decent. If we lived life based on something that happened to someone else on the internet then we would all be quivering shut ins.

I went and spoke to the tenants in my purchase. They assured me they planned to move and I took their word.

It is a bit of a risk but not much. Most people wouldn't dream of causing that kind of fuss.

Claw Hammer

More problems happen to people who take chances in conveyancing than happen to people who are careful. If the contract is signed subject to vacant possession it is up to the person selling to deliver vacant possession. Time can be made of the essence in the contract and if vacant possession is not provided in time the purchaser can sue.

PhoenixParker

FortySeven wrote: »

99% of people are decent. If we lived life based on something that happened to someone else on the internet then we would all be quivering shut ins.

I went and spoke to the tenants in my purchase. They assured me they planned to move and I took their word.

It is a bit of a risk but not much. Most people wouldn't dream of causing that kind of fuss.

While I agree with you that we have to live our lives based on the assumption that people are decent, I would not sign a contract to buy a house for multiples of my annual salary on that basis.

Kandr10 talk to your solicitor about the tenancy situation. If vacant possession at the point of contract signing isn't an option, at the very least include a clause in the contracts that the house must be given with vacant possession by a certain date or you have the right to pull out and/or impose a financial penalty. I'd also ask about including clauses related to the condition of the house if there isn't already something in there. A disgruntled tenant is probably more likely to do damage then an owner with a financial stake in the house sale.

I'd also question the legality of one months notice. There are legal minimums and one month doesn't meet most situations. The tenant may voluntarily leave within 1 month, but if they decide not to, the seller won't have a leg to stand on which increases your exposure to risk.

Butters1979

FortySeven wrote: »

99% of people are decent. If we lived life based on something that happened to someone else on the internet then we would all be quivering shut ins.

I went and spoke to the tenants in my purchase. They assured me they planned to move and I took their word.

It is a bit of a risk but not much. Most people wouldn't dream of causing that kind of fuss.

That's true. I'd take a 1% risk buying a second hand car maybe, but not on a several hundred thousand Euro investment.
People might seem decent and intend to move until the time comes, then suddenly they realize they can't afford anywhere else. When it comes to keeping a roof over their families heads, others start getting a lot less concerned about your rights tot he property.
If they refuse to leave, for whatever reason, you could spend a very long time trying to get them out.

OP, it's your decision and all but again I wouldn't accept that risk myself.

Found the one I was talking about it. Have a read. Different situation as this guy had a mortgage, but you could leave yourself open here.
It didn't work out too bad in the end, vendor paid the guy off. But you could see the potential for much worse.

http://www.boards.ie/vbulletin/showt...p?t=2057355311

FortySeven wrote: »

Bought my house while tenants in. Made it clear I wanted vacant possession when contracts were signed and this was adhered to. Very smooth transaction. No issues with it.

Played Russian Roulette once. Didn't die. Perfectly safe.

kandr10

Im actually querying on behalf of my folks, who I feel, are not really in a position to take a gamble on a situation like this. Their solicitor has said he will include a clause to say it has to vacated by such a date or it will fall through. it would certainly be nice to assume that 99% of people are decent however I'd hate my folks to come against someone in the 1% bracket. It's interesting to hear other people's experiences from that point of view. the thread linked above certainly makes for interesting reading!

Claw Hammer

kandr10 wrote: »

Im actually querying on behalf of my folks, who I feel, are not really in a position to take a gamble on a situation like this. Their solicitor has said he will include a clause to say it has to vacated by such a date or it will fall through. it would certainly be nice to assume that 99% of people are decent however I'd hate my folks to come against someone in the 1% bracket. It's interesting to hear other people's experiences from that point of view. the thread linked above certainly makes for interesting reading!

99% of people does not mean 99% of tenants.

FortySeven

Claw Hammer wrote: »

99% of people does not mean 99% of tenants.

So, tenants aren't people?

You must be a landlord.

Claw Hammer

FortySeven wrote: »

So, tenants aren't people?

You must be a landlord.

Tenants are a subset of people in the same way that dogs are a subset of animals.

kandr10

Claw Hammer wrote: »

99% of people does not mean 99% of tenants.

So...a smaller percentage of tenants are decent so I should be wary? Not sure if that's what you mean?

4ensic15

kandr10 wrote: »

So...a smaller percentage of tenants are decent so I should be wary? Not sure if that's what you mean?

I don't know the provenance of the 99% figure? was there a survey done? The issues is this. If you get one of the 1% then you suffer 100%. If there is a 1% chance of going blind following an operation and you are one of the 1% you go 100% blind not 1%.

kandr10

4ensic15 wrote: »

I don't know the provenance of the 99% figure? was there a survey done? The issues is this. If you get one of the 1% then you suffer 100%. If there is a 1% chance of going blind following an operation and you are one of the 1% you go 100% blind not 1%.

No, it's a common turn of phrase. No surveys were done. The point you make is valid, it doesn't matter what the risk is at the end of the day if you end up affected by it. I was just trying to see if anyone had a similar situation to gauge whether my concerns were justified or if there were any other issues related that I hadn't thought of.

FortySeven

kandr10 wrote: »

No, it's a common turn of phrase. No surveys were done. The point you make is valid, it doesn't matter what the risk is at the end of the day if you end up affected by it. I was just trying to see if anyone had a similar situation to gauge whether my concerns were justified or if there were any other issues related that I hadn't thought of.

And therin lies the internet. 1 person who has actually done it shouted down by a myriad of people who are scared of it.

Just demand vacant possession as part of the contract and you'll be grand op.

Butters1979

FortySeven wrote: »

And therin lies the internet. 1 person who has actually done it shouted down by a myriad of people who are scared of it.

Just demand vacant possession as part of the contract and you'll be grand op.

I don't think you get the point. It doesn't matter if you did it without issue. The point is it's a risk and an unnecessary one.

OP, have you asked why they have not issued a notice of termination? There would be no reason other than to squeeze a bit more money out of the house.

Do you know how long the tenants have been there? They could be entitled to several months of notice. It's all well and good having this verbal agreement of a month, but if the tenant then discovers they can't find other accommodation they could dig their heals in and insist on their rightful notice period. You would too if you had nowhere to live.

I'm not saying you should walk away, but I would insist that the vendor start notice of termination straight away. Vacant possession in the contract is all well and good but neither you of the vendor can force the tenants out if they won't leave.

There is no reason for you to accept this risk.

kandr10

Butters1979 wrote: »

I don't think you get the point. It doesn't matter if you did it without issue. The point is it's a risk and an unnecessary one.

OP, have you asked why they have not issued a notice of termination? There would be no reason other than to squeeze a bit more money out of the house.

Do you know how long the tenants have been there? They could be entitled to several months of notice. It's all well and good having this verbal agreement of a month, but if the tenant then discovers they can't find other accommodation they could dig their heals in and insist on their rightful notice period. You would too if you had nowhere to live.

I'm not saying you should walk away, but I would insist that the vendor start notice of termination straight away. Vacant possession in the contract is all well and good but neither you of the vendor can force the tenants out if they won't leave.

There is no reason for you to accept this risk.

That's very helpful thanks. I'll certainly find out these details before things proceed further. I'm guessing that having vacant possession in the contract just means that my folks could pull out of the sale without suffering any loss, that it wouldn't guarantee it as such?

Butters1979

kandr10 wrote: »

That's very helpful thanks. I'll certainly find out these details before things proceed further. I'm guessing that having vacant possession in the contract just means that my folks could pull out of the sale without suffering any loss, that it wouldn't guarantee it as such?

That's exactly it. Vacant possession in contract means you can cancel the contract if they can't provide vacant possession, however the contract has no power over the tenants to force them to move out.

This could very likely not be an issue at all. I'd just question why the vendor will not proceed with notice of termination if they intend to sell. It's suspicious to me.

the_syco

Butters1979 wrote: »

I'd just question why the vendor will not proceed with notice of termination if they intend to sell. It's suspicious to me.

I think the OP should consider that the vendor has issued the notice of termination, but the tenant has ignored it.

With this in mind, the vendor is selling to a cash buyer, as the vendor is hoping the cash buyer won't demand vacant possession.

If there is nothing owed on the house, the owner may not want to spend any more money on it (such as legal fees to get the tenant evicted), and is hoping someone will take it of their hands. Is it much of a "bargain"?

kandr10 wrote: »

Estate agent has said there is an agreement that a months notice will be given once contracts are signed.

With what I've said above, once contracts are signed, the estate agent will wash their hands of this crap, and run to the bank laughing.

IMO, demand that the house is vacant before you sign the contracts, or walk away.

Sun in Capri

I know it is a cash sale but are you using a solicitor? If so are they not also insisting that the house is vacant before you sign the contracts?

kandr10

Thanks for all replies everyone.

Just to update, the solicitor said it's a common occurrence as landlords don't want properties lying vacant whilst they try to sell. Putting a clause in the contract is what he suggested as normal practice in this situation. Obviously this doesn't guarantee anything other than the ability to walk away should things go pear shaped, thus minimising risk.

As luck would have it however, the tenants are moving out this week anyway so it's no longer an issue. Perhaps the thread might be useful to someone in future!