How do you put together a deal so that the Vendor rents the property they are living in for X amount of time after settlement. Will everything go according to a normal transaction then write a residential tenancy agreement for the agreed time? It needs to be a condition of purchase so then again does it need to be worded into the contract. What sort of wording would suffice?
Hi Jaffasoft
Just get your solicitor to put it in the Special Conditions area, i.e. the extra clauses added to the standard Contract of Sale. Here you can nominate just about anything you like. Just have it written up something like; "The Vendor agrees to enter into a xx month residential tenancy of the property, at $xxx per week, prior to completion of the Contract".
Your solicitor will be able to word it correctly.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
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Hi Daniel,
According to an article last year, depending on where you are doing the property transaction, a vendor who becomes a tenant will fall outside the residentual tenancy authority (RTA) and if a dispute arises it will be a meesy one.
It really seemed odd to me.
While I am looking for the article … ask the RTA in the respective State if there are any future complications with a previous seller becoming the new tenant.
Queensland …
"The original intention to exempt tenancies arising out of contracts of sale (section 20A) was directed at situations where property settlements may be delayed and the seller remained in the property for a short time and may be paying rent. The RTA has noted that different arrangements are now emerging, where the seller may agree to rent back their house from the purchaser for a longer period, such as six months, and is clearly a residential tenancy but is exempt because of this section. All sector groups agreed that these tenancies should be covered, which would provide clearer tenancy rights and obligations and easier dispute resolution processes. However, the sector agreed that short-term arrangements resulting from a sale, suggested to be limited to 28 days, should continue to be exempt for ease of administration for the parties."
Sources: http://www.rta.qld.gov.au/zone_files/Docs/policy_review_paper-tenancies_act_review.pdf
Daniel just ring the authority and check it out … I might be wrong.
Property Trader | Boston West Pty Ltd
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In Victoria here mate.
Will pass that info onto the conveyancing. I guess it's to secure the rent, they seem like pretty good people but you can't take any chances. The rent will be covering the mortgage and some $60 extra per week. If the contract had the clause that settlement would occur at any point that rent ceased to occur then risk mitigation could be to settle then and get another tenant in perhaps.
I don't know, will hear what the conveyance says. Maybe get a standard residential tenancy agreement as well. Just had a thought. Maybe the clause could include an adjustment clause if the full rent amount was not paid in full by a set settlement day. The purchase price would be adjusted accordingly. Settlement could then be in next Christmas holidays 2010 if this contract signs!
Hi Daniel
I think the point here is in your original question, i.e. "after settlement". If they wanted to rent the property prior to settlement then your solicitor would use a "licence to occupy" (LTO) and in NSW and Vic too I believe, a LTO is not covered by the Residential Tenancy Act.
However, because the Vendor currently occupies the property, there's no reason to go for a LTO. As mentioned above, just get your solicitor to write up a Special Condition and that should satisfy the Vendor that they're going to get their requested lease after settlement.
Cheers, Paul
Paul Dobson | Vendor Finance Institute
http://www.vendorfinanceinstitute.com.au
Email Me | Phone MeAn alternative way to finance your home.
Yep, i will pass that on Monday. Thanks Paul.
Hi, just make sure they are willing to have all carpets steam cleaned on vacation & high standard of cleanliness when departing the property. These areas can be a little vague and could end up costing you.
Hi
I am in Victoria and looking at a property where the vendor wants to rent the property after settlement for 6 months. I am just wondering what sort of clauses people generally put to ensure that the vendor who then will become the tenant does not start requesting expensive repairs (e.g. repair hot water cylinder, pool pump, etc.) after settlement.
Thanks in advanceYou would need a written lease with an inspection report and incorporate this into the contract of sale
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thank you
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