Selling with tenants
- Thread starter Lotana
- Start date
As far as I know, the new owner also inherits the existing lease.
Tenants have a legal lease and may rightfully stay until the end of the lease, regardless of who is landlord.
Not sure though what happens in terms of acting PMs though if new owner decides to change PMs upon settlement. Maybe if all parties including tenant agree then new lease can be drawn up.
Cheers Brenda
Tenants have a legal lease and may rightfully stay until the end of the lease, regardless of who is landlord.
Not sure though what happens in terms of acting PMs though if new owner decides to change PMs upon settlement. Maybe if all parties including tenant agree then new lease can be drawn up.
Cheers Brenda
Hi Lotana,
the property is sold subject to a tenancy, and on settlement a Notice of Attornment is sent out, which is basically the legal term for telling the tenants that they have a new landlord, and new directions on how to pay their rent. This notice is usually sent by the solicitor (but the agent can also do it). So, the new owner does not need to sign a new lease with the tenant.
The rents are adjusted on settlement and the new owner just picks up where the old owner left off.
In the case of PM's - the agent needs to receive an "order on the agent" directing the old PM on how to distribute any rent monies being held, then if the new owner so wishes he may collect the keys and relevant documents and change PMs or self manage
Hope this helps
the property is sold subject to a tenancy, and on settlement a Notice of Attornment is sent out, which is basically the legal term for telling the tenants that they have a new landlord, and new directions on how to pay their rent. This notice is usually sent by the solicitor (but the agent can also do it). So, the new owner does not need to sign a new lease with the tenant.
The rents are adjusted on settlement and the new owner just picks up where the old owner left off.
In the case of PM's - the agent needs to receive an "order on the agent" directing the old PM on how to distribute any rent monies being held, then if the new owner so wishes he may collect the keys and relevant documents and change PMs or self manage
Hope this helps
Thank you Joanna, it’s crystal clear now. Perhaps I could ask you for an extended opinion in my situation.
I am thinking of selling an apartment rented out as furnished/equipped to 2 separate tenants. One lease will run for a few more months, but the other tenant moves out in a week. My thinking is that the potential buyer will most likely be an investor (due to a number of reasons this apartment is more attractive for investors than for o/occupiers). I would like to place a new tenant and then put the property for sale furnished and fully tenanted with an unusually high return (over 5%, when the typical unfurnished unshared return in the building is under 4%). Is it a good plan?
Thanks,
Lotana
I am thinking of selling an apartment rented out as furnished/equipped to 2 separate tenants. One lease will run for a few more months, but the other tenant moves out in a week. My thinking is that the potential buyer will most likely be an investor (due to a number of reasons this apartment is more attractive for investors than for o/occupiers). I would like to place a new tenant and then put the property for sale furnished and fully tenanted with an unusually high return (over 5%, when the typical unfurnished unshared return in the building is under 4%). Is it a good plan?
Thanks,
Lotana
Hi Lotana,
The first thing that pops into my mind is why would a tenant sign a lease for a shared furnished apartment? How difficult or easy will you find it to find a replacement tenant for this type of situation?
A couple of things I would be considering if I were the purchaser:
* Is the 5% return a gross return or net return? Is it achievable again or did you just get lucky?
* If it's a fully equipped apartment, do you pay for any thing relating to this, ie weekly cleaning, telephone, electricity?
* What is the value of the furniture, and will the bank lend on it (generally no)
* I don't like the furniture, and the tenant is leasing a furnished property, so I'm stuck. I won't buy it....
* If there's another unit in the building for sale that is unfurnished and cheaper....if I buy some good second hand furniture at an auction, perhaps I can achieve the same results for a less outlay.
* Tenants renting a fully furnished place - more transient, not as stable, higher chance of the midnight flit?
Also, and someone else may be able to offer additional input here, but a "normal" investor would most likely steer clear of something like this....furniture, equipment, too much maintenance costs, too many headaches etc....
Just some thoughts to consider perhaps...
The first thing that pops into my mind is why would a tenant sign a lease for a shared furnished apartment? How difficult or easy will you find it to find a replacement tenant for this type of situation?
A couple of things I would be considering if I were the purchaser:
* Is the 5% return a gross return or net return? Is it achievable again or did you just get lucky?
* If it's a fully equipped apartment, do you pay for any thing relating to this, ie weekly cleaning, telephone, electricity?
* What is the value of the furniture, and will the bank lend on it (generally no)
* I don't like the furniture, and the tenant is leasing a furnished property, so I'm stuck. I won't buy it....
* If there's another unit in the building for sale that is unfurnished and cheaper....if I buy some good second hand furniture at an auction, perhaps I can achieve the same results for a less outlay.
* Tenants renting a fully furnished place - more transient, not as stable, higher chance of the midnight flit?
Also, and someone else may be able to offer additional input here, but a "normal" investor would most likely steer clear of something like this....furniture, equipment, too much maintenance costs, too many headaches etc....
Just some thoughts to consider perhaps...
