SELLING TENANT-OCCUPIED PROPERTY
5 DO’s and DON’TS
GOAL: Homeowners can start the process of evicting tenants when the house goes on the market. By the time the sale closes, the tenants will be gone.
1. UNDERSTAND THE NATURE OF THE TENANCY
a. Do you have a structured lease agreement with the tenant(s)? If there is, then the tenancy can properly be terminated according to the Agreement. Where the agreement is silent (without a termination clause), the Parties are governed by payment periods. Therefore, if rent is payable in monthly installments, a month’s notice is sufficient to terminate the tenancy.
b. Are you related to the tenant?
“Familiarity breeds contempt”. The proverb translates to “extensive knowledge of or close association with someone or something leads to a loss of respect for them”. In most where the tenancy is between persons of familial or friendly relationships, the business relationship suffers. In this instance, you may experience difficulty collecting rent and real troubles evicting these classes of persons (friends/family). We advise that you retain the services of an experienced lawyer to craft and deliver this eviction notice. In our experience, this has accomplished 100% success.
Once the notice has been delivered by a neutral third party, the family members or friends are reminded of the business relationship. This may sever ties, however, the goal of selling or buying the subject premises will be ultimately achieved, within the required time.
2. UNDERSTAND YOUR TRUE POSITION
Understanding your true position requires awareness of yourself and the situation you are in.
In today’s real estate market, we find more persons are willing to sell tenant-occupied properties especially in the familial situations specified above. At this juncture, we have a practical discussion with the client, especially after valuation is done. We examine the associated risks and costs of removing a tenant in this matter. Consideration is usually given to reduce the sale price, sometimes 50-100% less than its true market value, where tenants are reluctant to move. This induces purchases to assume the associated risks in removing the tenants.
In most instances, once the matter is handled in a timely fashion, it is worth the risk, without going to court.
3. ENSURE THAT THE NON-NEGOTIABLES ARE DETAILED IN WRITTEN SALE AGREEMENT
Is the property being sold “vacant possession” or “subject to existing tenancy”. This is perhaps one of the most critical terms in transactions involving tenants. Vacant possession requires that the property be vacant on completion of the sale. The obligation is for the vendor to ensure that this done. Subject to existing tenancies requires that the Purchaser agree to buy the property subject to the tenant’s occupation. Removal is at the purchaser’s expense.
We recommend that clients have a discussion with purchasers on this particular provision. Some will even insist on it. If there is an impasse, then the Client is usually required to consider their true position. Is this a risk worth taking?
4. DON’T THREATEN OR INTIMIDATE THE TENANT INTO LEAVING THE PROPERTY.
Some landlords become increasingly frustrated and take matters into their own hands. Resist the urge to take steps such as changing locks or removing personal property from the residence. You may find yourself the subject of criminal charges. Have a properly drafted notice delivered to the tenant and allow due process to take place.
5. DON’T DESPAIR
We understand the complications that may arise when you wish to dispose of your asset but have great difficulty with tenants. Once properly notified in keeping with the law, the tenants are usually required to leave. It really is that simple.
JA Property Associates is a client-focused Jamaican Real Estate Law firm located in Kingston. We specialize in the legal aspects of real estate sale, purchases and property titles.
Contact us at email@example.com or call (876) 291-0037