Tenants signing lease before settlement

Hi all,

What are the legal implications of signing a lease agreement with a tenant before settlement on a new IP, particularly if settlement is delayed?

Obviously the lease would commence after the settlement, but I'd like to get it all squared away before. Has anyone had a situation where settlement was delayed and the prospective tenant refused to change the commencement date? What sort of problems & solutions did you encounter?

Thanks!
 
Softmonkey,
where you enter the Lease commencement date, you can put something like "the latter of "x date" or the successful settlement of the property"

Boods
 
Be careful if there is already a current lease it stands until it expires. Also on the legal side you are not the owners until settlement and any lease prior to settlement if any matters went to Tribunal would be null and void as you were not technically the owners. Good luck try not to jump ahead of things
 
No current lease, the property is vacant. I had permission to conduct open inspections.

If the lease is declared null and void in tribunal or other court of law, can damages be awarded against the landlord? Hypothesising that the tenants had committed to moving on that specific date and found themselves homeless for X weeks.

boods99, I like your suggestion very much, thanks.
 
..., the property is vacant. I had permission to conduct open inspections.

You might have permission to conduct Open Inspections but you do not have permission, under law, to sign a lease on a property that does not belong to you until settlement actually occurs. You can only take an EOI deposit from your selected tenant, who can then still pull out & get his deposit back up until he signs a lease.
 
Tennants Signing Lease Prior to Settlement

I would suggest you talk with a Solicitor to ensure all is above board however I would probably place a clause in the lease stating something along the lines of after settlement on such and such a date and once you are in vacant possession of the property. It is not as if you are doing something which the future tennant is not aware of. You just need to safe guard your position in the event you do not obtain vacant possession on settlement.
 
You might have permission to conduct Open Inspections but you do not have permission, under law, to sign a lease on a property that does not belong to you until settlement actually occurs. You can only take an EOI deposit from your selected tenant, who can then still pull out & get his deposit back up until he signs a lease.

Listen to Prop on this one.
 
Thanks for the responses all. I had initially set a 1 week gap between settlement and lease, and in the end much desperate tussling with the bank got them into settlement the very day before the lease started!

So it worked out perfectly in this case with zero vacancy, but I know it could easily have been otherwise. I think I will use the "Expression of Interest Deposit" approach instead next time. Lots of excellent information in this thread, hope it benefits someone else.
 
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