About The Lease Agreement
Buyers who purchase a property that houses a tenant need to understand that the lease agreement that the previous owner has in place will remain in place until that lease expires - even if the property is sold on to another person. It's also worth noting that any costs associated with having an illegal tenant removed will be for the new owner's account.
People sell their leased investment properties all the time and most sales go through without any hitches. The current tenant simply pays his rent to the new owner and moves out once the lease has expired if the new owner wants to take possession of the property for his own use.
However, problems can arise if the existing tenant refuses to move once the lease is over. A recent article in the Cape Argus highlights the costs and stresses involved when a new owner is unable to take occupation because the person who is currently residing on the property decides he doesn't want to move.
Real Life Scenario
A Cape Town couple bought a home in Parklands and were due to move into the property on 1 November last year. There was an existing tenant, but this didn't affect the new owner's plans as that lease expired on 31 October. This is all pretty standard and things were going along nicely, until the tenant refused to move out.
According to the report, the tenant has continued to pay rent, but this, unfortunately isn't the issue. The couple has had to fork out R33 000 in bond, legal and storage fees and have had to move in with friends until the issue is resolved. The new owners have tried everything to get the illegal tenant out of the home, even going as far as attempting to find the tenant alternative accommodation. Despite this, the tenant continues to refuse to move out. An eviction order has been granted and the tenant has been ordered to vacate the premises by 13 February.
Anyone who has ever bought a home will understand the excitement surrounding the entire home-buying exercise - particularly when, as was the situation in this case, it's for the first time. It's hard to imagine what these owners went through in terms of emotional torture given that they had nowhere else to go and had to resort to living with friends while the issue is being resolved.
While this case is exceptional because the tenant simply refused to move once his lease had expired, it does highlight the dangers associated with buying a property that houses anyone other than the previous owner. Think about it, you will be dealing with an unknown tenant. After all, you didn't vet this person, you haven't built up a relationship with him/her and as such have little or no idea as to what sort of person he or she is. The new owner may also not approve of how the existing tenant is looking after the property, however, generally speaking, there is very little that can be done, providing that the tenant pays his rent and abides by the other terms and conditions before the lease expires.
Should you take legal action?
Taking legal action is always going to be a costly exercise and it imperative to do a little homework before signing the sales agreement. Issues such as how long the lease still has to run need to be ascertained and must be documented in the sales agreement. Under no circumstances should a buyer take a seller's word and just assume that the tenant will move out when the property is sold. Tenants have rights that need to be adhered to and assuming that as a new owner you have every right to boot a tenant out of the property is going to end in tears.
