When a property is purchased while there is a tenant in occupation, the tenant has certain rights. Potential purchasers need to be aware that the lease agreement remains in place despite the change of ownership of the property until such time as the lease expires.
This means that the lease will survive the sale and the new owner will step into the shoes of the previous owner as landlord. The terms of the existing lease will stay in force until termination.
When change of ownership takes place, the previous owner must transfer the deposit and any interest earned thereon to the new owner, who must then place it in an interest bearing account for the duration of the lease period. The new owner will then be responsible to refund the deposit, less any claim for damages to the tenant.
Should the person in possession of the property be an illegal tenant, the costs associated with having the tenant evicted will be for the new owner.
It is recommended, that should you own a property with a tenant and forsee the possibility of selling the property before the termination of the lease, to make provision for this possibility in the Lease
This article should not be used or relied upon as professional advice and is for information and marketing purposes. Please consult with one of our attorneys should you need legal assistance relating to this area of law.