Auction Sale – Who’s the Daddy?

by Readers Question

9:32 AM, 21st April 2020
About 6 months ago

Auction Sale – Who’s the Daddy?

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Auction Sale – Who’s the Daddy?

My wife and I have just sold an HMO property at auction (last Wednesday). It is a working HMO and the new owner is an investor who will be keeping the tenants on-board.

I assume that I remain the Landlord up until completion, is that the case?

I’ve seen in other articles that the new owner becomes responsible as new Landlord immediately on exchange of contracts (ie the day of auction).

I guess I’m not the first to sell a working HMO to an investor so would much appreciate any help on this.

Malcom


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Comments

Graham Bowcock

10:10 AM, 21st April 2020
About 6 months ago

You will be responsible until completion when the sale legally completes, so you need to continue acting as landlord, as you ordinarily would, until told otherwise.

Buyers are advised to ensure they implement insurance on exchange, just in case the vendor has let it lapse and they are still compelled to complete.

Rob Crawford

10:17 AM, 21st April 2020
About 6 months ago

If it is a licensed HMO, don't forget to inform the council of change in management.

Olu Adefisan

12:32 PM, 21st April 2020
About 6 months ago

I do not have specific details of your matter and so cannot speak to your situation as a result of which I will caveat my comments by asking that you should seek further advise from your lawyer and not rely on my general opinion. As a general rule, under the provision of the Section 3 (3A) of the Landlord and Tenant Act 1985, you or the new owner will be required to write to all existing tenants in the property informing them of the change of ownership, including providing them with the name and the address of the new owner. You are required to do this within 2 months of completion date, there is a penalty if you failed to do so. Until you do so, you will continue to be responsible, liable and act as the landlord even though you have sold the property, this in effect means that only you, will be able to collect the rents or enforce the tenancy conditions, but both yourself as well as the new owner shall be jointly and severally liable for repairing obligations. Please go through the details of exactly how to write the notice to be sent to your tenants with your conveyancing solicitor following your sales.

MalcolmH

17:01 PM, 21st April 2020
About 6 months ago

Thank you all for your input. Very helpful and I will certainly speak to my sol about the handover. There is a new tenant due to join before the completion date (which I don't have yet but expect it will be 28 days from exchange). So looks that I will be signing -in the new tenant on a new AST, protecting the deposit, supplying prescribed info etc. New gas cert also needed since the existing expired a few days ago but havn't renewed because of sale and lockdown.

Olu Adefisan

18:15 PM, 21st April 2020
About 6 months ago

Reply to the comment left by MalcolmH at 21/04/2020 - 17:01Yes. That is correct. But the obligation to serve the notice to the tenants lies with the new landlord and not you, and the penalty for not serving the notice lies with the new landlord and not you. All you need to do is provide a schedule of tenancies/ list of tenants, to be served with the notice, to new owner who would serve the notice to each of the tenants whose details you would have provided to him. Either you or your solicitor should then ask the new owner/buyer to provide proof or confirmation that the notice has been served. Until this is done, you will continue to act and be liable as the landlord, as if the property has not been sold by you. If after you have given reasonable period of time of say 6 weeks, and you feel that the buyer has not been able to serve the notice to the tenants, you can elect to serve the notice to the tenants by yourself, it will have the same effect.

MalcolmH

11:11 AM, 23rd April 2020
About 6 months ago

Thanks for that additional info Olu, much appreciated.

Pete Judd

15:20 PM, 28th April 2020
About 6 months ago

All the information given so far is true I would just like to add that when I sold a fully tenanted HMO I collected the rents as normal but then we made up rent accounts till the day of the transfer and the solicitors simply deducted the difference for the period after from the proceeds of sale.

MalcolmH

11:15 AM, 29th April 2020
About 6 months ago

Thanks for that note Pete, yes we'll be doing the same, apportion according to rent payment date.


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