Contract law

Upthere

Upthere

Winger
Just a quick question for any experts on the SMB.

If a property being rented to someone and is bought by another company.

Does the contract carry across to the new company? Even if it was signed and agreed by the old owners.

Hope I’ve explained that clear enough. Cheers
 


If you have tenants in situ then yes, they will almost certainly have a right to maintain their tenancy despite the property being sold. It is of course dependent on what was agreed in the tenancy though.
 
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In general, the rule on contracts is that if you buy something you also buy the rights and obligations of any contracts associated what what you've bought.

For example if you buy a company and that company had a contract with a supplier for goods and services and a contract with a customer for goods and services, now you have those contracts.

With a house and property though, there might be some other rules that apply as well/instead. Someone on here is bound to know if so
 
Buy property with a sitting tenant, you have to honour any tenancy agreement that had been previously made (I think this also applies to promises made even if they were only made verbally eg the previous landlord promised me a new kitchen when he last put the rent up)
 
If a tenant is out of their 1 year fixed term and is on a rolling contract they'd need 2 months notice. If they're still in their 1 year fixed term they have the right to stay there until the end of the term and then would need to be issued 2 months notice.
Most investors are happy with a tenant in situ during a purchase as they've got a guaranteed rental yield (unless they're purchasing for themselves and then they'd have to wait until the end of the year, unless the tenant agrees to vacate the property / get out of their FTA early).
 
normally there's a clause in the tenancy agreement saying that if the house is sold then the contract can be broken with notice. check the agreement.
 
Upthere said:
Just a quick question for any experts on the SMB.

If a property being rented to someone and is bought by another company.

Does the contract carry across to the new company? Even if it was signed and agreed by the old owners.

Hope I’ve explained that clear enough. Cheers
Click to expand...
Generally yes. Depends on the tenancy agreement to some extent though.
 
It is not a contract law question but a land law question. A tenancy is a lease, which is an interest in the land. A lease is binding on purchasers of the superior estate (e.g. the freeholder or a higher ranking leaseholder).

The distinction is important because generally, contractual rights are personal and contractual obligations cannot be enforced against or assigned to a 3rd party unless the 3rd party enters into an agreement to novate the original agreement.

In answer to your question, if the contract created a tenancy, it is binding on subsequent purchasers. If it was merely a licence to occupy, it is not.

@Cockney Mackem 's "general rule" is wrong. The company example he gives only works because the company is a separate legal person which exists independently of its owners.
 
stapler said:
It is not a contract law question but a land law question. A tenancy is a lease, which is an interest in the land. A lease is binding on purchasers of the superior estate (e.g. the freeholder or a higher ranking leaseholder).

The distinction is important because generally, contractual rights are personal and contractual obligations cannot be enforced against or assigned to a 3rd party unless the 3rd party enters into an agreement to novate the original agreement.

In answer to your question, if the contract created a tenancy, it is binding on subsequent purchasers. If it was merely a licence to occupy, it is not.

@Cockney Mackem 's "general rule" is wrong. The company example he gives only works because the company is a separate legal person which exists independently of its owners.
Click to expand...

Well said Stapler, you don't work for PLC by any chance, do you?
 
If the lease is an assured shorthold agreement (which is most common) the new owners must honour what is written in that lease. Notice to the tenant can only be served if the terms of the lease are breached (such as non payment of rent) or in the final 2 months of the lease. Hope this helps
 

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