Tenant in situ-contract query and tenant query please

Hi all, my friend is planning to buy a flat in which there is tenant in situ. And seller does not want to give notice to tenant till contract is exchanged. Currently property is managed by agent but my friend will manage tenancy himself. Agent is refusing to give any details of tenant to buyer-like contact details. I believe background checks details cannot be given to buyer due to GDPR regulations? :backhand_index_pointing_right: How to contact tenant? Buyer was hopeful of talking to present tenant and ask tenant to have a new contract with buyer after purchase. :backhand_index_pointing_right: In such cases, am i right that it is best to have new contract from day of purchase and re-protect deposit etc? buyer solicitor is not experienced in tenant-in-situ and will not help with that. Buyer has read about tenant in situ and thinks no need to have special solicitor. :backhand_index_pointing_right: do you all agree? and my friend is planning to add following clauses to the sale contract: :backhand_index_pointing_right: is there anything in contract about tenant-in-situ he may have missed?:backhand_index_pointing_right: is there anything else that needs to be done in tenant-in-situ case? contract clauses specific to tenant-in-situ::backhand_index_pointing_right: Essential Clauses for Sale Contract (Tenant in Situ)

Sale Subject to Existing Tenancy
    The Property is sold subject to the existing tenancy agreement dated [insert date], and the Buyer acknowledges that vacant possession will not be provided on completion. The Seller shall provide the Buyer with full and accurate copies of the tenancy agreement, rent payment history, deposit protection certificate, and all compliance documentation including EPC, gas safety certificate, and electrical safety report. The Buyer shall assume all landlord rights and obligations under the tenancy from the date of completion. The Seller warrants that the tenancy is lawful, the deposit is protected in accordance with the Housing Act 2004, and that no notices to terminate the tenancy have been served. The Seller shall notify the tenant of the change in ownership in accordance with Section 3 of the Landlord and Tenant Act 1985 and Section 48 of the Landlord and Tenant Act 1987.

Disclosure of Tenancy Details
    Require the seller to provide:
        Copy of the signed tenancy agreement
        Details of rent payments and arrears
        Deposit protection certificate
        Evidence of serving of Prescribed Information
        Inventory and condition report
        Any notices served (e.g. Section 21 or Section 8)

Assignment of Landlord Rights

    On completion, all rights, title, and interest of the Seller in the tenancy agreement(s) relating to the Property shall be assigned to the Buyer. The Buyer shall assume all landlord rights, responsibilities, and obligations under the existing tenancy agreement(s) from the date of completion. The Seller shall provide the Buyer with all necessary documents and information to enable the Buyer to fulfil their obligations as landlord, and shall notify the tenant(s) in writing of the change of landlord in accordance with Section 3 of the Landlord and Tenant Act 1985 and Section 48 of the Landlord and Tenant Act 1987.

Tenant Notification Clause
    Seller must notify the tenant of the change in ownership, and buyer must comply with:
        Section 3 of the Landlord and Tenant Act 1985 (notification of new landlord’s name and address)
        Section 48 of the Landlord and Tenant Act 1987 (address for service of notices) 

Indemnity Clause
    Seller indemnifies buyer against any claims arising from breaches of tenancy obligations prior to completion.
Transfer of Deposit Certificate and Funds

    On completion, the Seller shall transfer to the Buyer all rights and interest in the tenancy deposit held in respect of the tenant(s), including the deposit funds themselves, whether held in a government-approved scheme or otherwise. The Seller shall provide the Buyer with the original or a copy of the deposit protection certificate and all prescribed information served on the tenant(s) in accordance with the Housing Act 2004. The Seller warrants that the deposit is protected in a government-approved scheme and that all statutory requirements relating to the deposit have been complied with. The Seller shall provide the Buyer with all necessary information to enable the Buyer to comply with ongoing deposit protection obligations.

Compliance with Legal Obligations
    Seller confirms compliance with:
        Gas safety certificate
        Electrical safety checks
        Energy Performance Certificate (EPC)
        “How to Rent” guide 

Clause for Transfer of Rent to Buyer

    All rent and other sums payable by the tenant(s) under the existing tenancy agreement(s) in respect of the period from and after the date of completion shall belong to the Buyer. The Seller shall account to the Buyer for any such rent or sums received in advance or arrears on the day of completion. If any rent or other sums relating to the period after completion are received by the Seller after completion, the Seller shall promptly pay such sums to the Buyer.

Seller to Provide Evidence of Documents Served To Tenant in situ

    The Seller shall provide the Buyer with copies of all documents served on the tenant(s) and all compliance documentation relating to the tenancy, including but not limited to: the tenancy agreement, deposit protection certificate, prescribed information, gas safety certificate, electrical safety certificate, Energy Performance Certificate (EPC), ‘How to Rent’ guide, and any notices served (including Section 21 or Section 8 notices). The Seller warrants that all such documents are true copies of the originals and have been duly served in accordance with statutory requirements. If above mentioned documentation was served via email, then seller shall provide all relevant emails to buyer. The Seller shall provide these documents to the Buyer no later than [insert number] working days prior to completion.

Confirmation of Last Rent Payment

    The Seller shall provide the Buyer with written confirmation of the date and amount of the last rent payment received from the tenant(s) prior to completion, together with supporting evidence (such as a bank statement or rent receipt). The Seller warrants that this information is accurate and complete to the best of their knowledge.

Confirmation of Tenant Checks

    The Seller shall provide the Buyer with written confirmation that all legally required checks, including but not limited to Right to Rent checks and credit checks, were carried out on the tenant(s) prior to the commencement of the tenancy. The Seller warrants that these checks were completed in accordance with all applicable laws and regulations

Prescribed Information about Tenancy Deposit

    The Seller shall provide the Buyer with copies of all prescribed information relating to the tenancy deposit, served on the tenant(s) in accordance with the requirements of the Housing Act 2004 and any subsequent regulations. The Seller warrants that the prescribed information was duly served within the statutory time limits and that such evidence is accurate and complete.


Provision of Tenant Contact Details

               On completion, the Seller shall provide the Buyer with the current contact details (including address, telephone number, and email address, if available) of the tenant(s) in situ, to enable the Buyer to serve any required notices and to comply with all statutory obligations as landlord. The Seller warrants that the information provided is accurate to the best of their knowledge.

It’s essential that you have existing tenant and tenancy details to check legal compliance with processes when that contract started. You will be liable for their mistakes..

If they will not provide, walk away.

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Change the solicitor to someone who knows what he is doing

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Below is my standard response to buying a property with a tenant in situ. If the buyer cant get the information below, it may mean the landlord has made a mistake and can’t evict them. The options for me if I were buying would be walk away or offer 20%-25% below market value.

You are buying a business and need to do full due diligence, but you ask it through your solicitor. I created the list below a couple of years ago, which would be in addition to the normal conveyancing questions. The RRB may add to it:
• When the tenant first moved in, which can determine the type of tenancy they have and restrictions
• All rent paid on time and in full
• Credit checks and affordability
• Any complaints about the tenant from the landlord or neighbours
• Whether the property has been well looked after
• The status of all people living at the property
• The current state of the property and any disrepair or breaches s11/HHSRS/Fitness for Habitation
• Whether its licensable and licensed and all T&Cs are complied with
• Any property upgrades required and likely cost
• Any gas in the property and the age/condition of the boiler
• Whether all required gas safety checks had been complied with
• The EICR report
• Whether its let furnished and whether the furniture is included in the purchase price and is fit for purpose
• Whether there is any tenant damage
• Whether there is a detailed inventory signed by the tenant with photographs of move-in condition
• A copy of the tenancy agreement and if not an AST, is it legally valid
• That there is no mesne tenant, eg rent-to-rent
• If leasehold, whether there is consent to let and the freeholder insures the building
• Whether there have been any complaints from tenants about neighbours
• Crime rates and demographics for the area
• Whether the tenant was served with all required GSCs, How to Rent booklet, EPC and EICR from the start of the tenancy
• Whether require smoke and CO alarms have been fitted and if other fire related requirements complied with
• If a deposit was taken, whether it was properly protected, PI properly served and any other requirements complied with
• Right to Rent check carried out

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thank you v much David . huge help

thank you v much i will let buyer know

@Shalini1 if seller won’t provide contact details of tenant or history of rent payments/arrears and the tenancy agreement they are expecting you to take over, through solicitors well before contracts exchanged, walk away or insist on purchasing with vacant possession. Refusing to provide details of tenants /tenancy is a red flag - if they are good tenants seller would want you to know as it’s a selling point (no void period or need to find new ones). Why exchange/commit to purchase before getting vital facts?

Just like you wouldn’t buy a leasehold property without knowing who the freeholder/mgt Co was and what was covered by the Service charge, length of lease and GR.

Otherwise you have no idea what tenants you are taking on or whether they pay or will be a problem and need evicting at Buyer’s expense. Why take such a risk?

Good luck

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thanks a lot David i have raised concern

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