Can An AST Be Signed Before Buyer Completes?
Discussion
I'm hoping for a yes or no answer, and hoping it's that simple!
If I wanted to rent a flat from someone who hasn't yet legally completed on their purchase, would the AST (which lists him as the owner/landlord) be valid as long as by the time the tenancy period started the completion had taken place?
Putting it another way, does it matter if the landlord doesn't legally own the property on the day the AST is dated/signed as long as he does legally own the property by the time the tenancy period begins?
Bit of an odd one I know!
Dom
If I wanted to rent a flat from someone who hasn't yet legally completed on their purchase, would the AST (which lists him as the owner/landlord) be valid as long as by the time the tenancy period started the completion had taken place?
Putting it another way, does it matter if the landlord doesn't legally own the property on the day the AST is dated/signed as long as he does legally own the property by the time the tenancy period begins?
Bit of an odd one I know!
Dom
Assuming the property is leasehold because he doesn't own the building, I don't think legally he can sublet to you. As a lessee he will need to ensure you abide by the terms of the lease. He cannot do that if he hasn't signed it.
Assuming he will own the building I cannot see how the tenancy agreement will be valid given at the time you both sign, he doesn't own it. I would wait until he does.
Assuming he will own the building I cannot see how the tenancy agreement will be valid given at the time you both sign, he doesn't own it. I would wait until he does.
Edited by anonymous-user on Thursday 12th January 19:02
wormus said:
Assuming the property is leasehold because he doesn't own the building, I don't think legally he can sublet to you. As a lessee he will need to ensure you abide by the terms of the lease. He cannot do that if he hasn't signed it.
Assuming he will own the building I cannot see how the tenancy agreement will be valid given at the time you both sign, he doesn't own it. I would wait until he does.
Thanks for the reply! It's leasehold as you say. I was hoping that given that all dates contained within the agreement would be when he owned it, the actual "Date of agreement" wouldn't matter and would still be binding even if it was before legal completion. It seems I was wrong!Assuming he will own the building I cannot see how the tenancy agreement will be valid given at the time you both sign, he doesn't own it. I would wait until he does.
Edited by wormus on Thursday 12th January 19:02
Dom
ETA: If we dated the tenancy the date the rental starts (by which time he will legally own the property), but signed it now - would it be valid then or would the fact that the agreement date wasn't the same as the date it was signed?!
Surely, you could make the AST conditional upon the landlord being the beneficial owner of the property. The AST would then start on that date.
In effect you are creating an agreement to lease. We do this all the time when we are developing a site, we require the tenant to enter the agreement for lease before we commence land acquisition.
In effect you are creating an agreement to lease. We do this all the time when we are developing a site, we require the tenant to enter the agreement for lease before we commence land acquisition.
Really appreciate it - no, we've been given a blank AST from an agent which has been amended accordingly.
It's a bit of a weird situation as I'm selling the property to him and renting it back for a fixed term of one year, hence I need the agreement in place before exchange/completion to cover myself, but the tenancy period won't actually start until completion (next Friday).
Cheers!
Dom
It's a bit of a weird situation as I'm selling the property to him and renting it back for a fixed term of one year, hence I need the agreement in place before exchange/completion to cover myself, but the tenancy period won't actually start until completion (next Friday).
Cheers!
Dom
Zeemax_Mini said:
Really appreciate it - no, we've been given a blank AST from an agent which has been amended accordingly.
It's a bit of a weird situation as I'm selling the property to him and renting it back for a fixed term of one year, hence I need the agreement in place before exchange/completion to cover myself, but the tenancy period won't actually start until completion (next Friday).
Cheers!
Dom
Does the AST have a definition of commencement date? Just reword the definition so that it relates to completion under the sale agreement. It's a bit of a weird situation as I'm selling the property to him and renting it back for a fixed term of one year, hence I need the agreement in place before exchange/completion to cover myself, but the tenancy period won't actually start until completion (next Friday).
Cheers!
Dom
Better would be a short agreement written by your solicitor that says on completion of the purchase the buyer and tenant will enter into the AST.
wormus said:
Assuming the property is leasehold because he doesn't own the building, I don't think legally he can sublet to you. As a lessee he will need to ensure you abide by the terms of the lease. He cannot do that if he hasn't signed it.
Assuming he will own the building I cannot see how the tenancy agreement will be valid given at the time you both sign, he doesn't own it. I would wait until he does.
As a leaseholder of several leasehold rental flats, I have always believed that it is not the leaseholder that would be subletting, but the leaseholder's tenant/s.Assuming he will own the building I cannot see how the tenancy agreement will be valid given at the time you both sign, he doesn't own it. I would wait until he does.
Edited by wormus on Thursday 12th January 19:02
It is not so much the date a tenancy agreement is signed, but more the starting date of the rental agreement. When renting student accommodation, it was nothing to sign a student up to a tenancy agreement, 10 months before the start of the tenancy.
A tenancy agreement once signed has no rights under a consumer protection rights of a cooling off period.
Thanks both! To answer:
TERM OF TENANCY
The Landlord lets to the Tenant the Property/Premises for a period of 12 months subject to the Break clause (Clauses 33.1 and 33.2) as set out in this Agreement. The Tenancy shall start on and include the **th day of January 2017 and shall end on and include the **th day of January 2018 but may be ended earlier by the Tenant giving notice under clause 33.1.
Thanks again.
Dom
blueg33 said:
Does the AST have a definition of commencement date? Just reword the definition so that it relates to completion under the sale agreement.
There is no definition of "commencement date", just the "Term Of Tenancy" as seen below, plus "This agreement is made on the xxx day of xxx" at the top of it.TERM OF TENANCY
The Landlord lets to the Tenant the Property/Premises for a period of 12 months subject to the Break clause (Clauses 33.1 and 33.2) as set out in this Agreement. The Tenancy shall start on and include the **th day of January 2017 and shall end on and include the **th day of January 2018 but may be ended earlier by the Tenant giving notice under clause 33.1.
Wings said:
It is not so much the date a tenancy agreement is signed, but more the starting date of the rental agreement. When renting student accommodation, it was nothing to sign a student up to a tenancy agreement, 10 months before the start of the tenancy.
A tenancy agreement once signed has no rights under a consumer protection rights of a cooling off period.
Thanks, there is that! If completion had taken place then obviously that would make sense, the situation I want to avoid is him turning around after completion and saying that the AST is null and void because he wasn't the legal owner when he signed it and therefore couldn't legally enter into it. A tenancy agreement once signed has no rights under a consumer protection rights of a cooling off period.
Thanks again.
Dom
Ok, so I think the best route is a simple agreement for lease.
This needs to state who is the landlord and who is the tenant, the address of the property and you can put in something about timing if required, eg a longstop date makes sense, at which point the obligations of both parties fall away.
You will need a definition of the AST, along the lines of
"Assured Shorthold Tenancy means the AST appended in the form annexed at Annexure 1 subject to any amendments agreed between the parties (acting reasonably)"
Make sure that the lease states the rent and make sure that there is a definition of the rent and the sum stated in the Agreement to Lease. You will also need to state the commencement date of the AST, this can be referenced to the date of completion of the landlord's purchase.
eg
"Rent means the sum of £xxx paid under the terms set out in the Assured Shorthold Tenancy"
"Term Commencement Sate means the Completion Date or if earlier the date the tenant takes possession or occupation of the Property"
The condition will be
"The Landlord completing on the purchase of the Property"
Then you will have a clause called
"Grant of Assured Shorthold Tenancy
Subject to the provisions of this agreement the Landlord shall grant (or procure the grant of) the Assured Shorthold Tenancy and the Tenant shall accept the Assured Shorthold Tenancy"
"Terms of the Assured Shorthold Tenancy
the term of the AST shall commence on the Term Commencement Date"
I would also add a good faith clause
"Good faith
The parties agree and acknowledge that they will work together in good faith to secure the satisfaction of the Condition and provisions of this agreement"
Good practice would also suggest that you have a contracts rights of third parties clause
"Contract (Rights of Third Parties) Act 1999
A person who is not party to this agreement is not intended to have any right under the Contracts (Rights of Third Parties) Act 1999 or to enforce any term of this agreement.
I stress that the info above is for guidance only I am not a lawyer and you really should have your solicitor draw up this agreement. It doesn't need to be complex but you need to protect your position to ensure that the landlord is obligated to enter the lease and that if you have any requirements about the conditions of the property etc you need to ensure that these are included
This needs to state who is the landlord and who is the tenant, the address of the property and you can put in something about timing if required, eg a longstop date makes sense, at which point the obligations of both parties fall away.
You will need a definition of the AST, along the lines of
"Assured Shorthold Tenancy means the AST appended in the form annexed at Annexure 1 subject to any amendments agreed between the parties (acting reasonably)"
Make sure that the lease states the rent and make sure that there is a definition of the rent and the sum stated in the Agreement to Lease. You will also need to state the commencement date of the AST, this can be referenced to the date of completion of the landlord's purchase.
eg
"Rent means the sum of £xxx paid under the terms set out in the Assured Shorthold Tenancy"
"Term Commencement Sate means the Completion Date or if earlier the date the tenant takes possession or occupation of the Property"
The condition will be
"The Landlord completing on the purchase of the Property"
Then you will have a clause called
"Grant of Assured Shorthold Tenancy
Subject to the provisions of this agreement the Landlord shall grant (or procure the grant of) the Assured Shorthold Tenancy and the Tenant shall accept the Assured Shorthold Tenancy"
"Terms of the Assured Shorthold Tenancy
the term of the AST shall commence on the Term Commencement Date"
I would also add a good faith clause
"Good faith
The parties agree and acknowledge that they will work together in good faith to secure the satisfaction of the Condition and provisions of this agreement"
Good practice would also suggest that you have a contracts rights of third parties clause
"Contract (Rights of Third Parties) Act 1999
A person who is not party to this agreement is not intended to have any right under the Contracts (Rights of Third Parties) Act 1999 or to enforce any term of this agreement.
I stress that the info above is for guidance only I am not a lawyer and you really should have your solicitor draw up this agreement. It doesn't need to be complex but you need to protect your position to ensure that the landlord is obligated to enter the lease and that if you have any requirements about the conditions of the property etc you need to ensure that these are included
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