Purchasing a Sale and Rent back property at auction?

by Readers Question

14:38 PM, 10th October 2017
About A year ago

Purchasing a Sale and Rent back property at auction?

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Purchasing a Sale and Rent back property at auction?

I am interested in buying an auction property which is currently let. It appears that the tenancy was the result of a private buy and rent back agreement but according to the auction pack there is no evidence of any formal documentation supporting it.

I can see the risks to the tenant in this situation.

What are the potential risks to a purchasing landlord?

Alison



Comments

Neil Patterson

14:44 PM, 10th October 2017
About A year ago

Hi Alison,
Do you know if there was a properly drawn up regulated Sale and Rent Back SARB agreement and when?
Are there any charges held against the property by the tenant?
Have you spoken with the tenant about what they understand the sale means?
Definitely take legal advice but an auction does make this tricky before committing.

Please see the history of sale and rent back >>> http://www.property118.com/the-history-of-buy-to-let-sale-and-rent-back/397/

Alison King

9:45 AM, 11th October 2017
About A year ago

Thanks Neil. There was no formal documentation at all in the legal pack either about the SARB agreement or tenancy. It was reported as not supplied by the landlord. The information available paints a sorry history; purchased just before the credit crunch in an area that has been slow to recover, TMW mortgage and a tenancy that is probably in breach of the mortgage conditions, recent legal cases favouring the tenant in SARB disputes, eventual repossession and forced auction sale. Its a poignant reminder of how things can go wrong. It would have been a good buy for the price and area and I'm happy for good tenants to stay as long as they want, but my strategy is to buy in cash and remortgage later and I can't afford to risk inheriting other people's problems. I woke up this morning glad I hadn't bid.

Neil Patterson

10:57 AM, 11th October 2017
About A year ago

Good decision to walk away with no formal documentation especially as it is becoming a buyers market recently.

Charles King - Barrister-At-Law

11:03 AM, 11th October 2017
About A year ago

Very wise decision Alison! It could have been a great bargain, but the risks are very high. Incidentally I'm sure I know you from somewhere.

NW Landlord

20:59 PM, 11th October 2017
About A year ago

Can anyone tell me when the SARB legislation came in ?


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