For Sale: Nice Home With “Excellent” Tenants

[Author – Tim ODwyer]

What to do about a tenanted property for sale? Well, if you are a typically cavalier real estate agent, you might not care a fig about the sellers, the buyers or the tenants for that matter. You’d just flog it off regardless, then wait for your fat commission cheque to be collected for you on settlement by some dopey solicitor.

Often I see sellers who are blissfully unaware that, while their agent stitched up the sale on a standard contract, they have legally bound themselves to give “vacant possession”. This means they must ensure that their tenants have vacated the property by the settlement date – no matter what the tenants’ rights may be. Seller clients of mine recently got caught like this. The tenants dragged their feet and, in fact, went on holidays after receiving a notice to vacate from the sellers’ agent. Settlement was delayed. And my clients, who’d trusted their agent, had to cough up $3,000 to the buyers for their inconvenience. The agent, who was ultimately responsible for the whole fiasco, still wanted full commission on the sale and declined to contribute a cent to the compensation paid by the hapless sellers to the buyers.

The only good news for the sellers is that I have advised them that, because the agent was not properly appointed, they aught to be able to recover all the commission that was collected.

Just as often I will see some young first homebuying couple being conned into signing up to buy a tenanted property. “No worries,” a smooth-talking salesperson says, “these excellent tenants will move out as soon as their lease expires.” I quickly bring such starry-eyed youngsters down to earth by asking them, “Do you want to be homeowners or landlords? What if your tenants don’t leave?”

Sometimes, in my experience, agents similarly talk homebuyers into letting sellers stay on after settlement and rent for a week or two, a month or two or whatever. Same problem. What if they don’t go when you thought they would?

Even investors looking to buy tenanted properties need to be wary of agents and their ways. A client of mine recently inspected a rental property, asked about the lease and was told by the agent, “No, we can’t let you see the tenancy agreement. That’s a breach of privacy.” Pull the other one, pal!

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