Dilemma re selling/letting flat Post Reply

[JamTart]

My sibling and I co-own a flat, which has been on the market for 9 months. As we did not receive any sensible offers and there are service charges which need to be met we decided to let it. A letting agent found a good tenant who is due to move in next week.

Yesterday, out of the blue, we received 2 offers from 2 prospepctive buyers, one of which then increased their offer to close to the asking price when they learnt of the proposed rental, the second of which is having a further viewing today and is also likely to increase their offer.

Apart from feeling uncomfortable about letting down the prospective tenant who is preparing to move in in under a week, I do not know where we stand legally re them and re the letting agent if we were to cancel the rental at this late stage.

Contractwise the tenant has signed and my sibling has signed, but the lettings agent forgot to include my name on the contract. I was chasing them for this yesterday and the day before, and ten minutes after I managed to speak to them about it I was called by the estate agent and notified about the offers - they had not told us about the viewings so we were completely blindsided. I have now been sent the contract with my name added to it, but as yet I have not signed. 

The tenancy term is 24 months, and the letting agent's fee over that time would be approx £4k.
The prospective tenant paid a deposit to secure the flat.
The flat was never taken off the market, in case the tenancy fell through.

Can we legally cancel the rental agreement? Any professional advice would be very welcome.


 

[Btc_mum]

It’s a mystery to me why landlords have such a bad reputation, and why there are so many calls for legislation to protect tenants, when we see such moral and shining examples as OP.

As my Scottish granny would say, give your head a wobble.

You’ve legally committed to giving someone a home for the next 2 years. You don’t try and wriggle out of it because you’ve had a better offer, unless you are prepared to compensate the tenant handsomely for your appalling behaviour

It’s also very convenient timing by the agent. Presumably the contract you signed with them leaves you liable for paying their fee if they introduce a proceedable buyer but you decline the sale?
So just at the point they know they are losing their commission, they magic up a buyer (or 2) knowing that will force you to pay them because you’ve committed to a rental contact.
I wouldn’t want to bet any money on the buyer being completely genuine, but still shame on you for considering it.

Either way, it’s going to cost you a lot to get out of one of the contracts you’ve tied yourselves into

[Joe24]

If you’ve not signed the contract then legally you can proceed with the sale.. karma might see the sale fall through but sounds like you have decent interest and need to sell.. so I know what I’d do.

You may wish to let the tenants live there on half rent for 3 months as goodwill to them and fallback for you.

[Scientist]

Firstly, find out if either buyer wants to/would be prepared to buy as a rental investment - if so, you have already found them a tenant and you must stipulate that they accept your tenant as theirs and take on the rental agreement. In that way, everyone wins. 

But what ever happens, if you accept either offer and conclude a sale, you must put it in the sale contract that the tenant be allowed to stay on for a period of time. Should this not be possible, you must then compensate the tenant in whatever way is suitable. 

Cancelling a rental agreement 1 week before the tenant is due to move in is a huge stab in the back for the tenant, you owe them assistance and compensation, any way you look at it. 

I hope you will do the right thing. 

[Benice]

I think the agreement might be legally binding verbally too. I am suprised that you or the letting agent did not tell the prospective tenant that the flat was on the market. Was it to be taken off the market at some point?
Honestly is best so I would explain asap to the person moving in so they understand and are in the best position of finding other accommodation fast as I think legally you cannot back out.
Other option is offer a short let in case sale goes ahead but at normal rent (not short let cost) but I doubt theyll want all this insecurity.

[Benice]

In addition, by deciding to let the flat on an AST, you already make a decision not to keep marketing it for sale which you should stick to.

To act on principal you should own your mistake, tell the prospective buyer flat is now let and apologise to all concerned and negotiate.
The outcome in reality depends mostly on the tenant who has a legally binding agreement, whether they agree to find somewhere else.

[ronangel]

You and they have a signed contract to rent for 24 months with a deposit payed, the person is about to move in If you try to back out of the contract you could find a court injunction against you from their solicitor for all expenses/breach of contract. if it is not granted plus alternative accommodation until you until they find a place at the same price and conditions and damages.This will cost you a LOT of money with no gain plus the arm and a leg plus vat of your own solicitors bill! who might even refuse to take the case as he supplied the tenancy contract you are fighting against and having to defend it if wins will cost you dearly!
The offer made by the buyer was below your asking price as no offer in writing was made or accepted at that point you  refuse it and tell them you have decided to take the flat off the market.
The state agent is not going to be happy but your contract with them probably says sole agency for x amount commission. upon sale no sell no pay as  did not allow you to advertise elsewhere.All in terms of the contract with estate agent.Would not be a good idea to sue you as if they win would be bad publicity when seen on places like this and they would lose far more future business than any money they got from you.
One other point not a nice thing to do to people moving in as they will be your tenants for next two years and could be tenants from hell if win case against you.

 

[JamTart]

This situation was sprung upon us Friday afternoon and was caused by a late signing of the contract by the tenant during which time a number of buyers had viewed the property. It involves not just me but a sibling who could badly use their share of the proceeds. The opportunity cost to them over 2 years is considerable, but there are other factors to consider, which is why I asked for professional advice (I have the moral torment aspect covered). btc_mum, ronangel, the intrigue you posit is wide of the mark: we have received the offers in writing, the two agents do not know each other, they are not charging us a fee, no one would be suing, no dark forces at play.
The 2 offers have now increased to full asking price. We have been advised by the letting agent that, regardless of their preference, we could extricate ourselves from their contract for a relatively low sum. Having had a couple of days to digest the offers, assess the legal and financial risks and our own feelings we are comfortable that we could proceed with the sale, but have ultimately opted to not to. All 3 agents have been very understanding and have behaved impeccably, both in their attitude to us and to the prospective tenant, who remains blissfully unaware. Thanks for all useful advice, esp Joe24 and Scientist.

[Benice]

Sounds like you have decided to go your own way for some fee.
Puzzled by your comment 'the prospective tenant who remains blissfully unaware' .
I would have thought it nicer to explain to them and apologise that you did not take the flat off the market despite appointing a letting agent to find tenants!

[chorister]

Well as someone who owns rental properties and has for years tried to do the best for our tenants it sounds to me like you and your sibling have decided to do the decent thing at some cost to yourselves. We’d live in a much better world if more people behaved like that, so well done and sleep well! Hopefully the tenants will love it and make it their home, and you will find your property really well looked after.

[ronangel]

You did in my opinion the right thing(morally and financially) by taking the flat off the market and allowing the tenant to move in as arranged.But as I said with legal problems and contracts had you not and tenant found out in the last minute  all arrangements for the move already arranged and would have been homeless with a lot of furniture and belongings to store,then things could have turned very unpleasant starting with a high court injunction not to sell until sorted and your rental costs for alternate accommodation) plus the injunctions from the buyer that had exchanged contracts and empty property,  plus big legal bills! Always look on the dark side of things where large sums of money are concerned.
Anyway everyone will live happily ever after! Remember with these things and courts only thing that counts is the wording of the contracts if legal.