Wondering exactly what happens when a tenanted property is sold? 

Maybe you’re new to the idea of property switching hands with tenants still living there, or you’ve just never needed to know until now!

Whether you are a buyer or a seller, there’s lots of things you’ll probably find useful to know. Being clued up about the process of selling a tenanted property can save you a lot of time, and possibly money, too.

Why? Well, having a good understanding of who is involved, what they do, and how long the process takes can mean you’re much more prepared to anticipate any issues in advance. 

As Scotland’s only estate agent for landlords, this is something we deal with every day. 

We get a lot of questions about the process of selling tenanted property and because the day of selling can be pretty busy, we thought we’d give you a heads-up about what goes on. 

What happens on the day a tenanted property is sold? 

As you can imagine, there’s a lot of moving parts, and what you really want is for things to go as smoothly as possible (sorry if that’s stating the obvious!). 

When a tenanted property is sold you have several parties involved; the buyer, the seller, the solicitors representing them, the respective letting agents for buyer and seller and of course, the tenant. 

TIP: Sometimes the buyer may opt for the current letting agent to stay on, which makes things a bit simpler. 

And right in the middle, is us, the expert estate agent. This means we’ve got seven parties all needing information, so we’re keen to ensure that everyone is on the same page.

Let’s take a look at what that involves.

Completing the legalities

At the start of the process, the buyer will submit a formal offer. If this is accepted and the buyer is paying cash, the sale is expected to take about 4-5 weeks to complete. If they are a mortgage buyer, the timescale is about 8-10 weeks.

Once the formal offer is in, we automatically get an idea of the expected completion date based on whether it’s a cash buyer or mortgage buyer.

Obviously, cash buyers complete faster because they don’t have to go through the mortgage application process.

Signing the missives is a clear sign that the sale has been completed, but nothing can happen without all legal requirements being met and relevant paperwork up-to-date.

Ideally, missives are signed a week or so ahead of the completion date, but occasionally missives can end up being signed on the completion date itself. This can be problematic if any of the parties is late with their paperwork. 

Because the mortgage application process goes through so many stages from valuation to loan papers being sorted out, it can be vulnerable to delays, which in turn may ultimately affect completion date. 

As you can imagine, it’s hugely frustrating for all concerned to learn that the completion date has to be put back. As agents we’re in charge of keeping everyone informed and that includes telling everyone that the agreed completion date “has slipped”…

…which, in truth, is really not fun but essential and part of the job.

Rent apportionment 

Ideally, if the new owner is entitled to a portion of the month’s rent (already received by the seller), then that amount is factored into the final sale settlement. It’s something dealt with by solicitors and helps to simplify the process.

Our reasons for suggesting this is to prevent any complications post sale caused by dividing up that month’s rent between the buyer and seller. This way, everyone is happy and no time is wasted arguing over who owes what. 

Tenancy agreement and safety certificates 

Both the tenancy agreements and the safety certificates are given to the buyer’s solicitor on the day the formal offer is accepted. However, it’s important that the current landlord remains aware of any imminent safety renewals. 

The reason for this? Well, if the date for renewal for certificates comes up between an offer being received and the sale being completed, it is the current owner’s responsibility to renew. 

During the conveyancing period, given the expected timescales of 4-5 weeks for a cash buyer, or 8-10 weeks for a mortgage buyer, this allows the buyer and solicitor time to scrutinise the tenancy agreement and safety certs and check the latter are all valid.

As for the tenancy agreement, that will continue to run after the sale completes. We do get a lot of questions about  it, so we’ve compiled a separate blog on what happens to the tenancy agreementwhen a tenanted property is sold.

Pssst! Just for your peace of mind, we had the article above verified by Paul Harper, a legal expert from trusted solicitor Lindsays.

Deposit transfer

The deposit is usually dealt with in the days following the sale. This is because it is held in a tenancy deposit scheme, and can only be transferred once there is a new landlord in place.

Within this scheme, the money will be held under the name of the landlord or letting agent, so the incoming and outgoing landlords of the property need to work together so that the transfer can happen with the minimum hassle.

To this end, we like to make introductions in the final week before the sale completes between the buyer and seller or their letting agent so that once the sale completes, all parties know who to contact regarding the deposit transfer and picking up the keys. 

Property management

As part of a successful transition from the old landlord to the new, it’s important for the tenant to know who to contact in case of emergencies such as leaks within the property, or appliances breaking down.  

So, as soon as you can, it’s wise to ensure that both letting agent and tenant are clear on contact information.

Remember, sales can happen on a Friday afternoon so it’s essential for the tenant to understand who to call if any issues arise over a weekend. 

If possible, It’s also useful for neighbours to know who the property manager or letting agent is in case of any event that might impact them such as fire, water incursion or noise disturbance. 

Advice from the property pros 

We’re happy to say that in most cases, everything goes smoothly and all parties stay on track. 

However, with the best will in the world, sometimes things don’t go to plan and the sale doesn’t end up completing on the day it is supposed to. 

This has implications for everyone involved in the sale and this is why we would urge you to familiarise yourself with the process and check that things are progressing as they ought to. 

The best way to do this is to recognise who deals with each part of the process and request that you are informed of any delays as soon as possible. 

Because there isn’t the same physical movement in and out of the property with a vacant possession sale, you can find that some of the parties don’t really see the urgency and hence the completion date can slip.

If this has ever happened to you, you’ll understand how annoying it can be. 

So, if possible, what we would encourage you to do is to request that your solicitor allows 5-7 days between the missives being signed and the sale completing.

This allows for a much smoother process. 

As you can see, it’s the estate agent who is pretty much in the middle of all this, and a good one will use that position to ensure that the right parties are talking to one another during each part of the process. 

In summary…

Well, now the veil has finally been lifted, and the mystery of what happens on the day a tenanted property is sold, revealed!

Okay, so it’s not really that much of a mystery; once you’ve done it once, it’s a bit like riding a bike. Easy to get the hang of. 

But, hopefully this gives you a better understanding of the process, and who is involved, so that whether you’re buying or selling a tenanted property, you can be prepared (also, having an estate agent experienced in dealing with this type of property is a big bonus!).

However, we do understand that it can all get a bit overwhelming, which is why we’re always happy to answer questions or go into more detail about the process of buying and selling tenanted property.

If you want to learn more, or need advice on buying or selling tenanted property, please don’t hesitate to get in touch. We’re always happy to lend an ear. 

Written by Ross MacDonald, Director of Sales & Cofounder of Portolio

Get in touch on 07388 361 564 or email to [email protected]