Hi all,
Just a question on being a landlord. I bought a brand new property in a new development. Settlement date is in 3 weeks.
Everything has been arranged ..ie finance etc.
When i bought it the owner said he needed to stay there for 12 months because he was building another house somewhere.
I thought “Sweet what a bargain”. So come 3 weeks before settlement i work out rental and according to the area its about $260-$300/ week
I offered him $270. He turns around and says “Oh i cant aafford that, i was thinking in the vicinity of $150-200 as i wont be using the 4 bedrooms. I got 2 kids and other morgages to pay and my wife is not working. [
]Man the dilema is ” I dont want to kik him out as I think its just wrong as they dont have another place to stay while they building their dream home. I know i’m too nice BUT what would be an alternative. $200/week is not acceptable.
What would u do in my situation.
vluu
What does your contract to purchase say. You should have a clause in it stipulating the rent to be paid and the fact that the vendor would be renting the property for a 12 month period after settlement.
Go back and look at your contract. If you have no clauses in there to effect the rental to the vendor, the vacant possession on settlement. He has to be reasonable and you’re not running a charity. How does he feel about paying $150.00 rent for his “portion” of the property and you rent the remainder to somebody else!!!
There is no clause on the contract saying that he will rent it out. It was just a verbal aggreement. What I do as this is my 1st IP.
Vluu
Yeh I agree, look you have to think of yourself and if there is no special condition permitting him to live there at a set rental, well you have to tell him that you either want $200-$250 per week or he can move out! Did you take a mortgage out to buy the property – if so maybe just charge him your mortgage repayments, but don’t charge less because you will lose money! Think of yourself I say
Talk to your solicitor. I would be looking to enforce vacant possession on settlement, but I think you need some legal advice. If you had a clause in the purchase contract regarding the rent stipulating an amount then you would have no problems….other than getting the money out of the man…but you would have had the option to sue him for breach of contract if he didn’t cough up.
I can’t help you much here. I think you need to talk to your solicitor fast.[
][]Don’t settle or ask vender to drop the price to recover the difference.
$100 times 52 = $5200
off agreed priceAndrew,
Great Idea.
God what would i do without u people [
].Thanks.
I wouldn’t settle unless I had vacant posession.
He may be trying it on with you in getting cheaper rent, however, if he is genuinely squeeling about the cost of rent AND building a house I’d say sayonara and get someone else in.
I feel that he is being unreasonable and at the end of the day you have your expenses.
You can’t just “not settle”, especially if the contract is unconditional. Getting him to drop the price on the deal by the difference in the rent is not a bad idea, however, you’d probably be stuck drawing up a new contract as this will effect the stamp duty etc.
Whats that old “legal” phrase they teach in every legal studies course – Offer, Acceptance and Consideration….your verbal agreement possibly isn’t worth much, its the contract that has standing and the contract doesn’t allow for the vendor to rent the property.
The vendor in my mind has one of two options:
1. Pay the rent you are asking
2. Give vacant possession on settlement.If you can get him to agree to pay you back the difference in the rent he wants to pay and the rent you want to charge over the 12 months period then great…however, given his comments “two kids, wife not working”, I think you won’t have any luck.
Damn,
I hate to be a bastard and just say “Take it or leave”.
Thanks Mike&Kaye
All,
The contract states
“Settlement date is the date upon which vacant possesion of the property and the Chattels shall be given, namely, upon acceoptance of title and payment of the whole of the purchase monies.”
So there is vacant possesion clause.
This should mean that the property must be vacant on settlement.
MMM What would be the right thing to do?
Vluu
Well you’re entitled to vacant possession and you’re entitled to receive market rent.
It’s up to you to enforce it.
Get a property manager to draw up a lease and get it signed prior to the settlement date. If the vendor won’t agree to pay market rent then insist on vacant possession. Talk to your solicitor.Rod.
When I said can’t just “not settle”, I meant you can’t just decide you aren’t going to go ahead with the settlement ie you need a reason as in a clause of the contract hasn’t been met. I’m in QLD so I’m not familiar with Property Law in other states. I am aware that contracts often go past the stated settlement date on the contract, however this usually occurs with the agreement of both vendor and purchaser ie the purchaser requires additional time to organise finance and asks the vendor for an extension to settlement date to achieve same.
I agree with the whole either he coughs up what you’re asking for in rent or he provides vacant possession on settlement. Now that you know there is a clause to that effect in the contract you have some leverage with the vendor. Either he agrees to the rent you want or he provides vacant possession. If he won’t pay the rent and won’t vacate you can have him for breach of contract. Still gets back to the same thing…talk to you solicitor.
No one likes confrontation but no one likes to be taken advantage of either. Bottom line is the vendor is just as responsible for doing his own due diligence on rents payable in the area as you were to come up with the figure you are asking. You’ve done your homework, I can’t see why the vendor doesn’t do his/her homework.
You’ve got three weeks to sort this out to your advantage. If you don’t want to appear to be the rat in the wood pile with the vendor, talk to your solicitor and get him to draft you a letter to the effect that the rent you are requesting is figure $x etc.
Hi vluu,
What’s the going rent in the local area where your IP is?
I don’t think it’s your problem that he’s not using all 4 bedrooms???
If he genuinely can’t afford it (does he have a mobile telephone, X-Box or Playstation, Computer, Video, DVD, CD, Huge TV , 2 cars, etc OKAY I’m a cynic []) offer a discount for limited time and tell him you will have to put up the rent (you are NOT a charity – well not until you have enough income to support charity methinks) at the end of this period. In the meantime you can let him know you are advertising for tenants who need a 4 bedroom house.
Personally, I think you need to nut it out with him, but YOU need to take control, after all it’s your property.
This is assuming you go ahead with settlement and agree to have the tenant remain in the property despite the ‘vacant possesion’ clause. I agree with Rod C and everyone else who suggests you get legal advice.Cheers
Sooshie []“small steps make the journey” (SAS)
Sooshi,
Around there for a 4 bedroom brand new double garage house..the cost will be about $260-$300/week.
I proposed $270. Yes I have contacted my solicitor. Awaiting his call back.
Thanks for all your input.
Regards
Vluu
I have a property settling next week, where the sellers wants to stay on another 6 weeks.
I have asked for 6 weeks rent in advance to be paid on the day of settlement.
I will not charge a bond.
I have asked to access the property to show prospective tenants through in that time.
My conveyancer has also put in a legal agreement that we do get vacant possession at the agreed time and that they are liable for any property damage, eg broken heater in that time.
This protects both parties, its not a formal lease, but I think an excellent idea because potentially these people could become squatters if some formal arrangement is not in place.
You have to remember that you are running an investment business and keep everything legal for the sake of both sides, otherwise you never know!All,
The more i think about it the more i’m inclined to just kick them out.
Damn
Dear all,
I just need your ideas.
I just saw the vendor. We both disagreed on all points. Nice person but he said worse comes to worse is that he’ll move out.
Ok. However he proposed to move the settlement to 12 months from now. That would mean that I dont have a debt for 12 months. And what if the price of the property would have risen, wouldnt I be better off.
The advantages I see is I can aim to buy a +ve property in the mean time. However I’m not sure if the bank wants to wait that long.
But what are the advantages and disadvantages for a situation like this (longer settlement). Has anyone ever gone through something like this.
Ur wisdom is much appreciated.
vluu
Hi all,Just a question on being a landlord. I bought a brand new property in a new development. Settlement date is in 3 weeks.
Everything has been arranged ..ie finance etc.
When i bought it the owner said he needed to stay there for 12 months because he was building another house somewhere.
I thought “Sweet what a bargain”. So come 3 weeks before settlement i work out rental and according to the area its about $260-$300/ week
I offered him $270. He turns around and says “Oh i cant aafford that, i was thinking in the vicinity of $150-200 as i wont be using the 4 bedrooms. I got 2 kids and other morgages to pay and my wife is not working. [
]Man the dilema is ” I dont want to kik him out as I think its just wrong as they dont have another place to stay while they building their dream home. I know i’m too nice BUT what would be an alternative. $200/week is not acceptable.
What would u do in my situation.
vluu
Hi Vluu,
I agree with some of the ideas of the other posters, but it seems that all the responses are from an arms length viewpoint. You sound like someone who doesnt want to be too hard on someone and since this is the first ip youve bought, u are understandably nervous about upsetting anyone. It also sounds like both u and the vendor are discussing things in a “take it or leave it way”. Why dont u go to him/her, tell them how much u have to make to cover payments, include a buffer and put it in the vendors hands. “Heres my problem, this is the minimum i need per week, now how can we make it a win win situation for both of us?” Negotiate it so that you both have to give up something. I think, judging by the rent he wants to pay you, he thinks ur a bit soft, and maybe hes taking advantage of that. Show him ur sums and negotiate some middle ground. You should get ur minimum payments plus something extra. If he cant afford to pay now, he needs to give up something on settlement.
AND IN FUTURE, MAKE SURE U HAVE EVERYTHING IN WRITING FIRST!
Good luck, please let us all know what u end up doing. I look forward to hearing how u handle the situation.Cheers K
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