/ Property question for legal types
We're trying to buy a tenanted property but the current owners are insisting on handing the bond back to the tenants on completion. I can see their point of view - they don't want to be liable if we run off with the bond - but on the other hand we will be left with no protection at all against the existing tenants wrecking the place, at least until we extract a bond from the tenants ourselves (which they could of course refuse to pay.)
This situation can't be unique so I'd be interested to know what the standard formula is for handling this - some sort of escrow?
Scotland or England/Wales? Is the deposit in a protection scheme?
It's in England, the deposit is held by the landlords but they pay an insurance scheme that protects the tenants.
Not really my area but could you look at the moving the bond to the deposit protection scheme on completion? That way you would protected and the tenants would know you wont fly by night with their cash.
Also look into the tenancy agreement to see if what provision is include re change of landlord. I would also say bollocks to 'comfort zone' you are a paying customer so get them to do some work, not happy say so. This is not an unusual problem so there will be a solution.
Agreed. It is a poor show if you have to ask important questions like this on UKC because your legal team can't help you.
Either whack your solicitor for a solution or get one who can.
I agree but 3 days before completion that's not really feasible.
I suspect the opposite. This is a common scenario and any property solicitor will know what to do.
Three days is better than three hours, our legal team can stop evictions in hours so your lot should be able to offer some solution, just get on them hard.
Remember you are paying well for them, any other service industry would be able to provide an answer in that time frame.
Completion or Exchange? What have your solicitors said?
Perhaps a bit late to negotiate the sale price downwards by a grand as a 'damage deposit'?
Completion - we already encountered difficulties because the property was already insured with the same company that we were going to use, and they refused to cover until the vendors policy was cancelled:-(
I think we are trying to withhold the deposit from the settlement figure, trouble is I can see the vendors point of view - he hands over tenants money to us, we refuse to repay, they go after vendor - which is why I wondered what the 'standard' solution was.
I'm obviously pi$$ed at our solicitor, we were recommended them in good faith, explained exactly what the circumstances were, they assured us it would be straightforward, and this just comes out of the woodwork in the final days...
If you're buying subject to tenancy, this should have been sorted ages back. It's a pretty common purchasing scenario, and any solicitor who's done more than a dozen or so properties will almost certainly have gone through the process. They should already have gone over the tenancy agreement, because it's the single biggest potential headache for you as a new landlord (the previous landlord could have made all kinds of daft promises to the tenant about what would happen to their tenancy once the house changed hands, not all of which might have been written down). The bond, or deposit, would have been one of the first considerations.
The tenants are not going to trash your house in the interim between you buying the house and establishing a new agreement with them - unless the reason the current owner is selling is that the tenants are awful, and he can't shift them, which should already have been discounted by your conveyancer - so in real terms it shouldn't be a deal breaker. But the whole point about employing a professional conveyancer is to avoid these headaches.
Don't be afraid of sticking a foot in someone's @rse about this - it's a basic, basic thing which the high fees are supposed to guarantee avoiding.
My only advice is DO NOT PROCEED until you're happy with EVERYTHING. I've found out to my cost that solicitors aren't liable for not advising you correctly if you didn't ask the question. Even if you couldn't have known to ask the question. So ask the questions, in writing. If they are stupid questions, so what, they won't take long to answer.
My last solicitor got quite uptight with me for it but I'm not making friends, I'm making the biggest financial commitment of my life. Stick the boot in. Chances are they don't want to do it because they'll be late to the Slug and Lettuce on a Friday.
(disclaimer, I know, some solicitors are good. Not all the same blah blah!)
He has to proceed, he's already exchanged. If he backs out he's at risk of losing his deposit, and even if he doesn't lose the full deposit there'll be financial penalties.
I'd go back to your solicitor and request that they write to the seller's sols asking that the purchase price be less úrent deposit. I guess you could also go to the tenants after completion and request the deposit from them, introducing yourself as their new landlord. If they refuse to pay it (let's face it, unlikely) just boot them out and get new tenants.
I went through this with a property we bought and is was easy peasy. A letter was sent to the tenant explaining details of change of landlord and effective date together with a copy of the tenancy agreement for them to resign with our signatures and their deposit was simply transferred under the scheme to our scheme account details.
Is it a firm of solicitors who operate across the whole wide country but make calls from the centre?
Crumbs. If contracts have been exchanged, then the sellers are perfectly entitled to tell the OP to get stuffed. Has anyone actually talked to the tenants yet? For all we know, they may be perfectly reasonable in this instance.
Worse case scenario is that OP looses the deposit. You live and learn I guess?
And could be liable to make up the difference if the property is later sold at a lower price.
None of the above is legal advice, consult your solicitor.
I feel for the OP. Sounds like your conveyancers have been a little slack.
Thanks! I don't feel *that* stupid, you take on someone on recommendation, brief them in good faith, and they let you down.
It happens to us all - the first house I bought, I used a mate as a conveyancer. He completely missed the fact that despite both parties being aware that the backyard belonged to next door, the deeds said otherwise. It only surfaced when we tried to sell, and ran into a particularly unpleasant pair of prospective purchasers.
You'll be fine, just have a strong word with your lot.
Your rights are governed by the contract. Read that.
Assuming it says nothing about returning the deposit to the tenants (which would be highly unusual) then your seller is totally out of order; they have contracted to transfer the freehold to you with all its attached rights, and the deposit is one of those. If they didn't want to be potentially liable on the tenancy agreement for your breaches of it they shouldn't have sold the freehold, and if they are really bothered about it then they should serve notice under section 8 of the L&T (Covenants) Act 1995.
As someone said, the deposit should be in a protection scheme and can simply be transferred to you.
Your solicitor really ought to know this stuff, it's true, but don't be too hard on them - most residential conveyancers wouldn't, and it's not their fault if the other side make unreasonable demands at the last minute. And believe me, the fees conveyancers charge to do the job properly and know everything they 'ought' to know are not high at all in relation to what is involved. This is why it usually isn't done properly.
Nothing obliges the tenant to give you a new deposit if the present landlord returns the existing one to them. Do not give way on this; you are in the right and if you do it may well cost you money.
Elsewhere on the site
2012 saw the release of the beautiful first volume of definitive Yorkshire Gritstone climbing, produced by the YMC with Robin... Read more
If asked to name a British female climber who stood out at a time when British women's climbing wasn't... Read more
Nikwax’s uncompromising environmental ethos has once again been recognised and rewarded by a trusted authority in... Read more
Hot Aches Productions premiered their latest film Redemption: The James Pearson Story at Kendal Mountain Festival on... Read more