Contract for Sale Subject to Existing Tenancies

Posted by: admin | Posted on: juli 26th, 2023 | 0 Comments

A contract for sale subject to existing tenancies, also known as a tenant-occupied property, is a sales agreement for a property that is currently leased or rented out to tenants. This type of contract is becoming increasingly common in the real estate industry as more and more people are choosing to invest in rental properties.

In a contract for sale subject to existing tenancies, the buyer agrees to purchase the property while honoring the current lease agreements with the tenants. This means that the buyer must take over the lease and continue to collect rent and maintain the property until the lease expires.

One of the main benefits of buying a property subject to existing tenancies is that you can start earning rental income from day one. There is no need to find new tenants or go through the process of advertising and screening potential renters. You simply take over the existing lease agreements and continue to collect rent.

However, like any investment, there are also risks involved with buying a tenant-occupied property. For example, you may run into issues with tenants not paying rent on time, damaging the property, or violating the terms of their lease agreement. It is important to do your due diligence before entering into a contract for sale subject to existing tenancies.

When reviewing a contract for sale subject to existing tenancies, it is important to pay careful attention to the terms of the lease agreements. Make sure you understand the length of each lease, the amount of rent being charged, and any terms or conditions that are specific to each tenant.

It is also important to review the financials of the property to ensure that it is a sound investment. This includes reviewing the current rent roll, expenses, and any outstanding liabilities or obligations.

In addition, it is a good idea to work with a real estate agent or attorney who is experienced in this type of transaction. They can help you navigate the process and ensure that the contract is fair and legally binding.

In conclusion, a contract for sale subject to existing tenancies can be a lucrative investment opportunity for those looking to enter the rental property market. However, it is important to do your due diligence and work with professionals to ensure that the transaction is a sound and profitable investment.