All you need to know about buying or selling a tenanted property
Category News
As a tenant, it is likely to be extremely unnerving to learn that your landlord has put your home on the market. Similarly, as a property buyer, you may be apprehensive about buying a property with a tenant in it, especially if you are planning to make the property your family home rather than an investment. Jawitz Properties runs through everything you need to know about when a rented property gets sold.
'Huur gaat voor koop'
The first pertinent fact is that having a tenant living in a home does not preclude the owner from putting the property on the market. However, the legal principle "huur gaat voor koop", meaning "the lease comes before the sale" is applicable. This means that the tenant will be entitled to live in their home until the end of their current lease - even if ownership of the property changes hands during this time.
Of course, if there is no signed lease in place, and the tenancy exists simply on a friendly month-to-month basis, this protection may not apply. On the other hand, if the new owner has purchased the property as an investment, and plans to rent it out, the tenant can easily resolve this problem by entering into a formal lease with the new owner.
Read the lease carefully
The potential issue of a landlord wanting to sell a property is another reason why both landlord and tenant need to be sure that they are familiar with the lease agreement that they have signed. It is possible for a sales provision to be built into a lease agreement. As a tenant, if your lease agreement contains such a clause, it may be possible for you to cancel your current lease, should you want to, when the property is put on the market.
Section 4.5(C) of the Rental Housing Act provides another great reason for tenants to ensure that they have read their lease agreement carefully. This clause states that a landlord has the right to terminate a lease "on grounds that do not constitute an unfair practice and are specified in the lease." Knowledge is power, and knowing exactly what is stipulated in your lease can help you avoid a lot of stress further down the line.
Keep the channels of communication open
The best advice for a landlord looking to sell is to keep the channels of communication with his or her tenant open. Discussing the matter openly can help to put both parties at ease. For example, a tenant with a valid lease may not understand that the property being sold does not mean that they have to move out before the end of their lease.
Things to think about if you're buying a tenanted property
If you're looking to buy a property as an investment, having a good tenant in place could be the factor that convinces you to sign on the dotted line. On the other hand, if you have purchased a property intending to live in it, it may be a slight inconvenience to have to wait a few months for a current lease to expire.
One of the most important things to do if you are buying a property with a tenant is to ask for a copy of the lease agreement that has been signed between the tenant and the soon-to-be former owner. You also need to ensure that the tenant is up to date with his or her rent and utility payments. The last thing you want to buy is a property with a squatting tenant.
Another important point to bear in mind is if a security deposit was paid at the start of the lease, it will be your responsibility to refund it when the tenant moves out at the end of their lease. As a new owner, you need to make sure that you get this money from the previous owner. Similarly, if the tenant needs to be reimbursed for any improvements that have been carried out during their tenancy, these funds need to be secured.
Whether you are a buyer, a seller, a landlord or a tenant, the best way to protect your interests is to work with a Jawitz #RealPartner. Contact us today and allow us to assist you in your next property venture.
Author: Jawitz Properties
