PROTECTED TENANCY / TENANTS

[andigee]

Hi,

I have just bought a property through a sourcing company, who finds NMD (no money down deals), now I bought the property for 25%BMV, it was tenanted, but I wasn't told what sort of tenancy and the current rent that was expressed is not even close?! On completion I have found out that the property has a 'Protected Tenacy' tenant in it!! As you can imagine I have hit the roof!!!

The current tenant pays less than half of what my mortgage payments are, so where I was even looking at letting the tenant stay there until they find a place to live, that's even out of the question now, or should I say, it's not upto me! and I'm at a loss every month!!

Surely, this cannot be legal, can it, i didn't even know?

Where can I check to see if this Protected Tenancy is legal and binding?

Should my solicitor not have seen this in the searches and warned me?

Does the company that sold this property onto me not have any legal obligations?

This is a property I am supposing to be living in at some point, that's why I purchased it with a residential mortgage, even the lender assumes this, does this make a difference, surely the lenders not going to be happy about the solicitor not spotting this, right?

Any help or guidance would be very much appreciated!!

Thanks

Andi

[Mortitia]

Hi Andi,

Oh dear, a definite case of 'caveat emptor' or buyer beware.

I hate to say it but you should have taken independant legal advice prior to purchase and I personally would say you have no comebacks to the selling company but maybe the solicitor. Was the solicitor recommended by the vendor or one of your own choosing? Still he should have pointed this out to you that this was not an Assured Shorthold Tenancy. Did you buy this for less than the current market value? You should have done if not you have been doublely done. Did you view the property and meet the tenants?

You no doubt thought the tenant was on an Assured Shorthold Tenancy (AST) but there are other types of tenancy like this one which is also called a Regulated Tenancy - often where the person(s) have lived there many, many years on a very low rent in poor quality accommodation because the landlord cannot increase the rent and therefore sees not point in spending money on the property. There maybe no 'agreement' just a rent book and as long as the tenant pays the rent there is nothing you can do apart from wait 'til their demise and hope the tenancy does not pass to a son/daughter or similar - check that out. Sometimes these tenants can be bought out for a cash sum.

There are specialist auctions where these types of properties are sold and the auctioneer always starts the bidding saying 'subject to a regulated tenancy' but really it is up to the buyer to get the legal pack and read all the details. Also some lanlords make a living by just holding these properties as they will increase in value especially in London. It is a waiting game. You must be careful not to harass the tenant(s) as they are probably there quite legally.

Are you sure you read all the small print this company offered? You should have bought with a 'buy to let' mortgage and usually the mortgage company insists on 'vacant posession' which could not have been achieved here.

Let us have some more details.

Mortitia

[Melboy]

I agree with Mortitia's comments.

First and foremost you, the buyer, must ensure that what you are buying at auction meets your requirements.

A visit to the tenants would have revealed all prior to buying.

Your solicitor should have checked the Tenancy arrangements/agreements having had any problems or queries flagged up by yourself initially for further investigation.

The company who sold you the property should have made it quite clear that the sale was a regulated tenancy and not an AST tenancy.

Mel.

[andigee]

Thanks for your reply Mortitia, any feedback is good feedback right now, I just want to find out exactly where I stand, deal with it and move on, even if it means having to hold and finance the bloody thing until I can legally take it back, but I won't lose faith, it's a learningcurve right? A BIG ONE.

You know I always use my own solicitors and broker..etc but in this case they wouldn't have it!! I wonder why?? STUPID! You can't imagine how much I am kicking myself for this!!

The thing is the company had it packaged up and on the marketed with a rental cashflow and £500PCM rental income on an AST, not a £200PCM regulated tenancy, yes I will lose £300 PCM on this bloomin deal! Yes of course I got the property 25%BMV, it was all the makings of a regulat NMD, but with a hidden agenda.

Regulated Tenancy.. good point.. how different is a regulated to a protected, is one better then the other? I'll look into the possiblilty of buying the tenant out, but will of course give them the time to find somewhere first, after all it's not there fault. How can I check out the agreement, whether there is a son/daughter it can be passed onto?

Yes I read all the smallprint, it said brand new red car and I ended up with an old green one with somebody in the bloody passenger seat!

This is what I think right now.., at the end of the day the property sourcer didn't do his job right, and the the owner of the property (property firm) had bought it at auction, maybe mistakingly and sold it through the property sourcer with the intention of misleading the buyer into thinking it was a regulat NMD with an AST, but also should the solicitor not have picked up on the fact it was tenanted as is?

I don't want to say which company did this right now, but I will disclose this information at the right time, I think it's only right, else other investors could lose money or be scammed too. I encourage everybody who loses money in property, type out your story in word and copy and paste it in every property forum on the web, make sure they never do it again.

Any feedback welcome.

THX

Andi

[Mortitia]

Regulated and protected tenancy are the same thing.

Get on to trading standards about this firm as they are scammers.

I wouldn't mind betting the 'solicitor' provided is not registered with the Law Society at all - but if they are go for them.

Chances are tenant will not want to leave - or previous landlord would have bought him out.

One of my relatives is a 'regulated tenant' and so I have looked into it a bit on his behalf - he gets lots of free help/advice from his local authority so I know that getting the tenant to go is unlikely.

Good luck,

Mortitia

[andigee]

Solicitor provided IS with the Law Society.. when you say get em... ? they are in breach of contract right, if it says clearly on the contract, property will be a vacant possession on completion, right?

I am pursuing legal route to see what my options are, will let you know what happens.

[Mortitia]

If the contract says - 'vacant posession will be given on completion' then that is what you should have had and yes they are in breach of contract and have acted illegally and wrecklessly in this transaction.

Check with the Law Society and look into their complaints procedure but you must give the solicitor in question time to 'rectify' things themselves so you need to contact them to ask why you are in this situation and tell them you are going to the LS as you are unhappy with their conduct.

I think using another solicitor useless at this moment as they will close ranks and it will cost you more ££££'s. Do as much yourself as you can. Didn't your lender insist on having some legal representation in this transaction? Are any of this lot on the property side bonded with the Financial Services Authority? Try them for free help.

Mortitia

[Gee]

Oh Dear!

You appear to have been well and truly stiched up and probably share a considerable amount of the blame.

There is no such thing as a free lunch. As for 25% BMV, yes it exists, but if the deal is so good, why would anyone let someone else have it? Any dealer would surely keep it for himself if it was so good.

NMD? This means someone is being misled as to purchase price and Market value, in this case probably you, the Lender and the Valuer, in other words fraud. However of the three, I bet only you knew this was NMD and didn't tell them!

Did you see the property and talk to the tenant? If not, You are even more to blame. In cases like this, if you inspect, the Protected tenant makes a point of telling everyone they are protected and will not be leaving, in order to stop anyone buying under the illusion that they can buy it cheap and evict the tenant.

You say you have a residential mortgage, do you mean owner occupier or a Buy to let mortgage?

Check with the Rent Officer to see if the tenancy is Protected/Regulated.

Don't hassle the Tenant .

It gets worse, you are very unlikely to have bought it below Market Value but above market value. The value of the property with a protected tenant is appproximately a third to two thirds of the open market value with vacant possession. The value will vary dependendant upon the tenants age and the likelyhood of them dying sooner rather than later without passing on the tenancy to a resident relative.

I think you should sit back this weekend and look at every thing you have signed. Did you pay the sourcer, if so you may be able to sue him for breach of contract.

However I suspect that if you look carefully, you will have read what they wanted you to believe and that it could be read differently. Such as the rental projection is the estimated amount the property could fetch under an AST not the rent currently passing.

I'm sorry to be so harsh but you do seem to have been incredibly naive particularly in view of the bad publicity regarding BMV and Buy to Let sourcers.

However not all is lost, dependant upon your answers, I think you have several options open, but it will involve legal action and that won't come cheap.

Good Luck

Gee