Renting to new tenant after exchange

[starbright]

Hi there

I have just sold a place vacant, and the buyer who has signed a 66w wants to get a tenant in there within the 6 week settlement period.

My solicitor says since they will 'take possession' of the property by moving a tenant into it, as per clause 18 of a standard nsw contract they should take all the risk of the property before settlement and we should add separate clause in the contract about defects, etc. Their buyers agent says since the buyer does not yet own the property, they can't insure for it and I should have landlords insurance on it in the meantime. They don't see the need to add any clause, is there anything I should get them to agree to?

If the buyer cannot complete for whatever reason, I would like the buyer to pay the costs in terminating the lease if the next buyer does not want a tenant in place. However, the buyers agent says this should come out of the 10% deposit, which will also be used to make up the difference in price if I resold it for a lower price. I thought the entire 10% was forfeited if they couldn't complete? And is there any rights to lease termination fees, and do I need to insert additional clauses to the contract?

Many thanks

 

[Propertunity]

I have just sold a place vacant, and the buyer who has signed a 66w wants to get a tenant in there within the 6 week settlement period.

Firstly, purchasers do not sign 66w forms, purchaser's solicitors do. It simply means they have waived their cooling off rights and so are unconditionally exchanged.

Secondly, who could care less that the purchaser wants to get a tenant in there? It is still your property, you are the one who calls the shots.

I suggest you tell them that they can advertise the property for lease, show the property to potential tenants, but not rent it out until after settlement.

Any rent received between now and settlement would belong to you and if that does not interest you, especially with all the associated legal dramas, then just tell them to take a hike.

 

[DaveM]

Agree with Propertunity.

What happens if the purchaser can't complete due to finance or has delays? You then have a tenant on a lease and no real way to get rid of them.

I also dont see any real benefit to the purchaser in having a tenant put in prior to settlement. You own the property, the rent would be payable to you and not the purchaser until settlement.

I would allow access for trades to QUOTE (not do any work) and for a leasing agent to show the property in the final 2 weeks of settlement. Nothing more.

 

[MangoMadness]

I am a novice so take my thoughts as such

Their buyers agent says since the buyer does not yet own the property, they can't insure for it and I should have landlords insurance on it in the meantime.

I purchased a unit which was at the time being rented in a hotel rental pool and was told that as soon as the contract went unconditional I needed to have insurance on the property immediately (before settlement) as both the seller and buyer share responsibility for the property from that point.

I was able to get insurance though an appropriate landlord insurance company so i dont understand why he wouldnt be able to do the same? Maybe asking the wrong insurance companies?

Overall though, I wouldnt take the risk. As soon as they own it they can put whomever they choose into the place, until then it stays as it is

 

[Sez]

As a PM I am often in a situation where people have purchased a property and want to lease it out ASAP. In these cases I have a chat to the vendor and arrange permission to advertise and show through prospective tenants prior to settlement but I advertise the available date of the property for once settlement has taken place. I also make a note that the availability is subject to change without notice (just in case settlement is delayed). Tell them if they want tenants then they can have them - from settlement.

 

[laurencei]

As with the above - its all very messy and risky for you, with no real gain.

Let them advertise the property etc - if they find a tenant can move in on settlement day, and everyone wins.

 

[smg]

Let them advertise to rent available after settlement date and show after settlement the purchaser just is not having to want to wait and lose money and get a tenant before hand. As an owner its not worth all the hassle for you might make them want to settle earlier