You’ve probably come across terms such as ‘vacant possession upon completion and ‘sold subject to contract.’ These are used across the property market by estate agents, conveyancing solicitors and buyers just like you. They describe circumstances that indicate the status of property upon exchange or completion. The details of each property exchange will vary between every single case. Throughout the UK the circumstances that one set of buyers and sellers face will differ from the next. Whilst purchasing a property can seem simple at first, complications can throw a spanner in the works.
A thorough understanding of these terms offers the best chance for a successful and straightforward property purchase. Within this article, we’ll break down the experience of purchasing a tenanted property with vacant possession upon completion. Our goal is to provide a comprehensive understanding of the scenarios that may arise and the complications you could face. This offers the best chance at a prepared and successful transaction for tenanted properties.
Buying and selling a tenanted property
Selling a tenanted property
Whilst this isn’t something that occurs particularly frequently within the UK, the standard conditions of sale in England and Wales do allow houses to be sold with or without vacant possession. This situation often arises when landlords wish to sell their property. When putting the house on the market, they have two options.
- Sell the property subject to the tenancy:
This would allow the tenants to remain in occupancy and any buyers relinquish the responsibility of letting the property, subject to the existing tenancy agreement.
- Selling the property with vacant possession upon completion:
In this situation, the seller would have to reach an agreement to end the existing agreement with the tenants to ensure the property is vacant upon completion of the sale.
Sellers should be clear about the condition of their property when advertising the home for sale. Selling a property as vacant upon completion will often draw a larger pool of buyers than selling subject to tenancy.
Buying a tenanted property
As a buyer, investing in a property that is subject to tenancy requires a conveyancing solicitor who is familiar with such a process. Along with the usual conveyancing procedure, there are several stages to ensure a smooth transaction. Confirming the existing tenancy agreement and making the necessary changes and arrangements can be convoluted and complex.
Certain details will need to be obtained such as the deposit amount and where it is being held. These details will need to be transferred along with the rental payments and agreed amounts. The buyer and their solicitor will often need to assess the existing tenancy agreement as well as any outstanding issues between the previous landlord and the tenants.
Buying a tenanted property with vacant possession upon completion
Whilst browsing the property market, if you come across any property that is advertised as vacant upon competition’ you can expect that upon the completion of the sale, the entire property will be empty. This means that you can move into the property and it will be free of all residents and belongings.
Whilst the moving in process should be simple, purchasing a currently tenanted property can occasionally become a hassle. Unlike typical property exchanges, you cannot always directly communicate with the residents within the property. Obtaining contact details from the estate agent or seller might be difficult which can make the arrangement of viewings and surveys especially challenging. All tenants are within their legal right to enjoy the exclusive occupation of a rented property. 24 hours notice and explicit consent is required for buyers or surveyors to enter the property. If the tenants are not comfortable with this interaction, you might find that the purchase process is particularly complex.
It might also be a concern that whilst the sellers have advertised the property as vacant possession upon completion, tenants might refuse to leave or the appropriate arrangements might not be made in time. If for any reason you are concerned that the existing tenants or residents may not vacate the property before the completion of the transaction, it is vital to talk to your solicitor before exchanging contracts. There are some options to ensure the property is acquired with vacant possession upon completion.
Depending on the circumstances, certain parties will be able to accommodate your requests whilst others won’t. Throughout negotiations, you could require the existing tenants to vacate the property before the exchange of contracts. At this stage, the property would be sold subject to contract. The agreement for sale would have been established, but the contracts are not yet legally binding. Unfortunately, not all sellers will be able to accommodate this request. Until contracts are exchanged, neither party is yet legally obligated to commit to the transaction. Therefore, sellers may become anxious that they would lose a source of income before the transaction becomes legally binding as the property is only sold STC.
Alternatively, you could discuss the inclusion of a clause within the contract that permits inspection on the day of completion. This would allow you to ensure the property has been vacated. Any failure to do so would result in a breach of contract which would entitle you to take legal action or prevent the completion of the purchase.
The purchase of a tenanted property can be particularly complex. Not only are you dealing with the demands of your sellers but there is also an additional party to account for that may have a conflict of interest during the sale of their current home. It is vital that you work with a qualified and confident solicitor who can assist you in the negotiations of vacant possession.
Agreements with the sellers can lead to the property being sold STC or with conditional clauses within your exchange contract. Ensure that all of your bases are covered with professional conveyancing. This will ensure you are able to purchase a home that won’t come accompanied by unexpected tenants or belongings.
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