Buying or selling a property with a tenant in occupation

It is common for a rental property owner or landlord to decide to put the property up for sale. So, what happens to the tenant in this scenario?

While it is usually advisable that landlords or property owners wait until the end of the lease before they sell the property that is not always possible. Unless a lease agreement provides otherwise, a lessor is not prohibited from selling leased premises to a third party whilst the lease is in force.

However, the rule “Huur gaat voor koop” which translates to ‘lease trumps a later sale’, the lessee is entitled to remain in occupation of the premises for the full duration of his lease.

In the case of a long lease (normally more than 10 years), the lessee is entitled to remain in occupation for the full duration of the lease only if the lease has been registered against the title deed of the leased land. The property owner cannot cancel the lease because of the sale. Only a breach on the part of the tenant can result in legal action and cancellation.

It is for this reason that all parties be aware of their rights in such a case. There are certain legal rights, but the rental agreement should also make provision for this as a safeguard. If the property goes up for sale, as a general rule to avoid problems consider the following:  

Seller/lessor 

1. The lessee must allow the lessor to put up a “to let’ or “for sale” notice towards the end of the lease. 
2. He must also allow prospective lessees or buyers to inspect the property, provided the lessor acts in a reasonable manner. 
3. He can also add a clause in the rental agreement that outlines access to the property for viewings and possibly also for photography and an inspection by the listing agent. 

Buyers, before you make a decision to buy. 

1. Obtain a copy of ID’s and lease agreement signed by all parties, and familiarise yourself with the lease to obtain an understanding of the clauses (escalation, payments of W&E etc)
2. Obtain proof of payments for past couple of months (I suggest 6 months) to ascertain if the tenant pays consistently and on time. 
3. Obtain the ingoing inspection report or do one when you purchase the property. 
4. Get the existing tenant deposit paid over to the Conveyancer during the sale process and paid over on date of transfer. 

For enquiries text, call or email #yourhomegirl Justina Hamupembe

Cell: +264812726001

Email: justina@chili.com.na 

 

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