Hi there
Hoping someone might be able to help with this conundrum that has developed just a few days before we are due to exchange. I would like to know what people might suggest the action we could take.
We will be exchanging on a property that has been listed by the vendor for rent. A tenant has been approved by the vendor, the agent called me to discuss as a “courtesy”. We have concerns re the quality of the tenant & expressed our concerns to the agent & said that we would not approve & that of course the vendor approved as it will no longer be their problem! My concern is I have a sneaky suspicion that they went ahead and signed the lease. I would like to know more about my rights (if any).
My gut feeling is that the tenant has the potential to be a nightmare & would rather not deal with it. so what I am wondering is what would I be financially be liable for at this stage given that we haven’t yet exchange?Any advice/ tips would be much appreciated!
Hi there
I'm not 100% sure of the correct answer but I'd assume since you haven't exchanged contracts you won't have too many rights. I've been in this exact situation before – we didn't end up buying the property but that was because of a different reason.
You could threaten to pull out of the deal – that might make them change there mind. There's also the risk you'll lose out on the property though.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Cheers for that.
Yes thinking we might just pull out of the sale. Would rather not have to deal with bad tenants potentially ruining the place.What is in the contract? Tenant or vacant possession?
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi JK,
Whoa – slow down……………….
As a property investor it is just about guaranteed you will encounter a 'not perfect tenant' along the line at some stage. The key is how you manage your property manager during these times.
At the moment you have 'found a property' that suits your investment needs. Go back to the reasons you selected the property and if they still stand then you may be jumping at shadows.
Find out;
Is the contract of sale subject to vacant possession?
How long will the lease be?
Can it be 6 months to see how things pan out? (You can always go through a formal 'I am not renewing your lease process' at the end of the lease)
What reasons give you cause for concern?Given the existing owner is trying to put a new tenant into the property suggest they may have cashflow issues. This may give you room to negotiate further if you haven't exchanged.
As an aside the current owner will be wearing the letting/leasing fee so it may not be all a bad thing.
Step back and think big picture.
As above posters highlight: what drew you to the property? Is it an area which will attract this type of tenant? Has the agent confirm the rent history/employment/references/tenant databases? Is the contract for vacant possession/tenanted?
If the vendor is paying agent fees it is cashflow from day 1.
It is not uncommon for the purchaser to be asked to approve a tenant during the sales process, think large commercial buildings where multiple tenants may change over the year.
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