Problem with settlement - help needed

Hi!

I've encountered my first obstacle during the purchasing phase of my first IP. My situation is as follows:

I settle on my IP in June 2008. I have been advised by my conveyancer that the vendors are not giving the current tenants notice to vacate at settlement.

My intentions were to begin renovations immediately after settlement. What would be the best way to resolve this dillema? Is it still possible for me to get vacant possession? If not, would I be able to substantially increase the rent? What are the possible implications?

Also, when we signed the contracts the vendors expressed that they wanted early release of the settlement money. Can they do this? I havent signed anything that gives them this right.

The tenant is currently renting on a month to month basis. The property is in Melbourne.

Any help would most appreciated.

Thanks

In Victoria 60 days notice is required to secure vacant possession - there is still plenty of time for notice to be served by the current owner. Is vacant possession one of the conditions of sale? Your solicitor may have to requisition the vendor to comply with this obligation. As for a rent increase, you also need to give 60 days notice of an increase, so this will take effect 2 months after possession.

As for releasing the deposit - there is no compulsion to do so as you are basically giving an unsecured loan to the vendor - what if they fail to complete on time or go bankrupt etc before settlement?

Hi,

First up, I'm not a lawyer, so this information is to the best of my knowledge. I recommend that you pay a professional to test its accuracy.

Vacant Possession

Assuming you bought the property on the basis that it was to be vacant at settlement, you have just cause NOT to settle on time. Rather to defer settlement until it is vacant or discount the sales proceeds by an agreed amount to compensate your for your loss. You may also look to rescind the contract if the terms of the agreement have been breached, but this is a more serious outcome given you'll be wanting your deposit money back and the vendor's solicitor presumably has that.

My recommendation is for your solicitor to send a friendly 'reminder' email as to the terms of the contract (i.e. vacant possession) and in doing so reiterate the importance of that clause to your intended plans.

Month to Month Tenancy

I understand that a tenant on a month-to-month lease needs to be given 60 days notice to vacate in this circumstance. You may like to check this with the rental manager / consumer affairs vic.
More information: Consumer Affairs Vic

Early Release Of Deposit Money

You are talking Section 27 of the Sale of Land Act. Rather than rephrasing the content, I recommend you check out:
http://www.lawyersconveyancing.com.au/section_27.asp

I hope this has helped.

Steve McKnight

P.S. If you're interested, I run a mentoring program that could help take your investing to the next level. It closes soon though, so check out http://www.propertyinvesting.com/results2008prereg2 while there's still time.

Thanks so much your prompt responses.

I forgot to mention above that at the time of signing the contracts i did NOT opt for the property to be vacant at settlement.

My conveyancer tried to negotiate with the vendors conveyancer who advised that the vendors dont want to give the tenants a notice to vacate as they are concerned of the potential for lost rent if the tenants were to leave before settlement.

So realistically it appears that i will have to wait 60 days after settlement before I can actually do anything, ie increase rents or commence renovations etc.?

Well, you could approach the vendor's and ask them to give notice during the settlement period. You may have to indemnify them against any lost rent though.

Otherwise, the day you settle issue the notice to vacate.

Cheers,

Steve McKnight

P.S. If you're interested, I run a mentoring program that could help take your investing to the next level. It closes soon though, so check out http://www.propertyinvesting.com/results2008prereg2 while there's still time.

I have IP in QLD and I just put it in the market today..... so.... is it 60 days notice from the day property was advertise for sale???? or 60 days notice once contract signed???

Look up the Residential Tenancies Site: http://www.rta.qld.gov.au/giving_the_correct_notice.cfm

thanks cat159..

another question??.. I have bought and sold  property.... How long or do I need to hold on to the paper work eg contract, building , pest inpection report, mortagage document etc