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Auction property with tenant not paying the rent in full

  • 14-07-2019 2:35pm
    #1
    parkhouse
    Registered Users Posts: 19 ✭


    Hi, I just want to have a constructive input in regards to an auction that I am interested to bid on.

    The Property is sold with a sitting tenant (Rent €11,400 per annum).
    There is a fixed-term tenancy agreement copy that was set since 2011 with the previous owner for one year.

    I spoke to Bidx1 who said according to the Bank who repossessed the property that the tenant is supposed to pay 950 per month but unfortunately is paying 277 (no reason why was provided).

    I am aware that in order to terminate the tenancy you need to give notice of 224 days if the tenancy is more than 8 years. However, if the tenant is not complying to pay the total rent, is it possible to terminate the tenancy quicker within 28 days’ notice, regardless of the length of their tenancy?

    Thanks
    Tagged:


«1

Comments

  • #2
    FishOnABike
    Registered Users Posts: 4,348 ✭✭✭FishOnABike


    I'd be asking myself why the current owner / landlord didn't get vacant possession before putting the property up for sale.

    How long was the fixed term tenancy agreement - is the fixed term expired + the tenant under a part four tenancy now?

    I'd treat it with caution unless you're willing to possibly have to run the full process of issuing a notice of arrears, notice of termination if rent and any arrears due to you are not paid, (arrears / debt to a third party might not count - I am not a lawyer so you should get proper advice), RTB hearing and several court hearings costing several thousand euro, all while getting little or no rent before an uncooperative tenant can finally be removed, possibly a year to two in all.

    Unless it's a bargain at a serious discount allowing for the potential headache you would be buying into and you're willing to play the long game it's a potentially a lot of hassle.

    The current owner / landlord would have a larger market and probably get a higher price if they had vacant possession. It would seem they think it too much trouble to remove the bad tenant - do you want to buy their trouble?


  • #3
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    Thanks for the input.
    The current owner is PTSB Bank who repossessed the property. I do not know why PTSB didn't get vacant possession before putting the property up for sale.
    It is fixed-term the fixed term tenancy agreement which was for 1 year starting on May 2011. the tenant did not get any other fixed-term tenancy agreement after that.
    My main goal of buying the property is not for rent. it is more to move in and maybe down the line to rent it out.
    I spoke to the tenant when viewing the property, according to the tenant, the previous owner did not care to maintain the property, she would be really happy to leave as the house is not in good condition and looking forward to going to the hostel and get a cancel house!!!!
    Well, it is a great bargain if the tenant will vacate!
    Thanks


  • #4
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    What does the contract for sale say about the tenancy?


  • #5
    Stop moaning ffs
    Banned (with Prison Access) Posts: 4,850 ✭✭✭Stop moaning ffs


    New account and the tenant tells you she wants a council house.

    Of course she did.


  • #6
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    There is only one house on Bidx1 with a tenancy of €950 per month. There is no lease shown with the legal documents.


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  • #7
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    4ensic15 wrote: »
    There is only one house on Bidx1 with a tenancy of €950 per month. There is no lease shown with the legal documents.

    Yes there is none but I have spoken to the tenant and she gave details about her tenancy.

    Sale contract is clear that The Property is sold with a sitting tenant for €11,400 per annum). However the tenant is just paying 277.

    The property is a freehold

    My main concern is how to terminate the tenancy?on what base as she is just paying 277 according to the Bank?


  • #8
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    parkhouse wrote: »
    Yes there is none but I have spoken to the tenant and she gave details about her tenancy.

    Sale contract is clear that The Property is sold with a sitting tenant for €11,400 per annum). However the tenant is just paying 277.

    The property is a freehold

    My main concern is how to terminate the tenancy?on what base as she is just paying 277 according to the Bank?

    My advice would be to set your max bid at 20k less than you are willing to pay for the property and, if you are successful, offer 5-10k to the tenant to leave. If they are not willing, 20k is probably around the cost in lost rent and fees for 18 months or more to get rid of them.


  • #9
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    Marcusm wrote: »
    My advice would be to set your max bid at 20k less than you are willing to pay for the property and, if you are successful, offer 5-10k to the tenant to leave. If they are not willing, 20k is probably around the cost in lost rent and fees for 18 months or more to get rid of them.

    Interesting advice, How do I offer 5-10k to the tenant to leave, what is the process or the steps I need to follow? and what are my guarantee that the tenant will leave after the offer been given?


  • #10
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    parkhouse wrote: »
    My main concern is how to terminate the tenancy?on what base as she is just paying 277 according to the Bank?
    It could be that the tenant was paying that amount to the council for RAS, before the landlord decided to sell up?


  • #11
    punisher5112
    Registered Users Posts: 24,647 ✭✭✭✭punisher5112


    Wow no wonder the country is gone to the dogs.....

    I wouldn't touch as have you seen inside?.

    Will your insurance cover for a rebuild or complete fit out???

    To much to take on...


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  • #12
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    the_syco wrote: »
    It could be that the tenant was paying that amount to the council for RAS, before the landlord decided to sell up?

    If the tenant was paying that amount to the council for RAS. How about the rest who is supposed to pay then??? The landlord did not sell but the property was repossesed


  • #13
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    parkhouse wrote: »
    If the tenant was paying that amount to the council for RAS. How about the rest who is supposed to pay then??? The landlord did not sell but the property was repossesed
    Usually they'd pay it to the council, and the council would pay the full amount to the LL. I wonder if, for whatever reason, the payments stopped going to the LL, and thus the house got repossessed as the LL couldn't afford the mortgage without the rent from the council. But the tenant kept paying only the amount that they paid in the RAS agreement.

    If the original owner couldn't get rid of them before they gave up, why do you think you will? The tenant can tell you what you want to hear, but stay there fora very long time.


  • #14
    Claw Hammer
    Registered Users Posts: 6,155 ✭✭✭Claw Hammer


    Permanent TSB accepted the surrender of negative equity by to let properties from landlords on the basis they will not pursue them for the shortfall between the realised price of the property and the amount outstanding on the loan. It is quite likely that this is one such property.

    Obviously O/P is paying cash for this property. With plenty of patience and work he may succeed in getting the tenant out in a few years. It will be on the pigs back by the then.


  • #15
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    Claw Hammer wrote: »
    Permanent TSB acceptez the surrender of negative equity by to let properties from landlords on the basis they will not pursue them for the shortfall between the realised price of the property and the amount outstanding on the loan. It is quite likely that this is one such property.

    Obviously O/P is paying cash for this property. With plenty of patience and work he may succeed in getting the tenant out in a few years. It will be on the pigs back by the then.
    This property was let back in 2011 by the the owner then the property was repossessed with the tenant. According to the bank the tenant is paying 277 instead of 950 as agreed back in 2011...sorry but I did not understand that TSB accepted the surrender of negative equity????
    What do you mean by OP????
    And why the tenant will leave in a few years as the max notice is 224 day????
    Thanks again for your input


  • #16
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    You are the OP (original/originating/opening poster).

    It is not unheard of for a tenant to refuse to leave at the end of the notice period. Should the tenant refuse to leave for whatever reason, it is a pretty slow process through the courts to get the tenant out.


  • #17
    ED E
    Registered Users Posts: 36,164 ✭✭✭✭ED E


    OP = You, original poster.


    You don't seem to be clear on how things work here.

    If any tenant stops paying rent tomorrow then they will be able to stay in that house for at LEAST 1.5yrs if not 2.5yrs before they are actually removed. Thats no rent, not even some. And the landlord won't get all the costs involved back, nor the missed rent. All gone.

    224 days isnt applicable at all here.



    My guess:

    Tenant currently has a bank on their case. Bank knows whats up, they do this day in day out. You clearly arent too experienced with the rental dysfunction in Ireland. Tenant tells you what you want to hear, you purchase, they've got a lesser adversary. Two - Three years free living.


  • #18
    Always Tired
    Closed Accounts Posts: 945 ✭✭✭Always Tired


    parkhouse wrote: »

    I am aware that in order to terminate the tenancy you need to give notice of 224 days if the tenancy is more than 8 years. However, if the tenant is not complying to pay the total rent, is it possible to terminate the tenancy quicker within 28 days’ notice, regardless of the length of their tenancy?

    Thanks

    The landlord has to follow the steps to evict them, nothing you can do.


  • #19
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    Graham wrote: »
    You are the OP (original/originating/opening poster).

    It is not unheard of for a tenant to refuse to leave at the end of the notice period. Should the tenant refuse to leave for whatever reason, it is a pretty slow process through the courts to get the tenant out.
    Is it this property is a surrender equity and if so from what way does impact the OP???? Also according to the receiver the property is a freehold is this good ?????


  • #20
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    Mod Note

    You need to take specific qualified legal advice. You are asking questions here that nobody is in a position to answer.

    You may not ask for, and posters may not give, legal advice.


  • #21
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    ED E wrote: »
    OP = You, original poster.


    You don't seem to be clear on how things work here.

    If any tenant stops paying rent tomorrow then they will be able to stay in that house for at LEAST 1.5yrs if not 2.5yrs before they are actually removed. Thats no rent, not even some. And the landlord won't get all the costs involved back, nor the missed rent. All gone.

    224 days isnt applicable at all here.



    My guess:

    Tenant currently has a bank on their case. Bank knows whats up, they do this day in day out. You clearly arent too experienced with the rental dysfunction in Ireland. Tenant tells you what you want to hear, you purchase, they've got a lesser adversary. Two - Three years free living.

    Spoke to Irish landlord association they said if tenant isn’t paying you can give 28 days notice. Don’t know this 1.5 to 2.5 years come from


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  • #22
    Graham
    Moderators, Society & Culture Moderators Posts: 17,642 Mod ✭✭✭✭Graham


    If the tenant refuses to leave at the end of the 28 days notice there is an entire court process you have to follow before you get the property back.


  • #23
    ED E
    Registered Users Posts: 36,164 ✭✭✭✭ED E


    parkhouse wrote: »
    Spoke to Irish landlord association they said if tenant isn’t paying you can give 28 days notice. Don’t know this 1.5 to 2.5 years come from

    Run. Run run away before you get eaten alive.


  • #24
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    parkhouse wrote: »
    sorry but I did not understand that TSB accepted the surrender of negative equity????
    If the house was bought for 600k, and is now worth 400k, then the house has 200k of negative equity. Usually, there'd be no option to give the house back without paying that 200k negative equity, but the poster stated that TSB accepted some houses back without the owner having to pay the negative equity.
    parkhouse wrote: »
    And why the tenant will leave in a few years as the max notice is 224 day????
    If you give the tenant notice of 224 days, and they don't leave, you must go through a legal process to make them leave. Illegally evicting them would mean that they get a massive payout from you, and also they may get to move back into the house. So after the 224 days, it may take you a year and many thousands of euro of legal fees to evict them.


  • #25
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    parkhouse wrote: »
    Spoke to Irish landlord association they said if tenant isn’t paying you can give 28 days notice. Don’t know this 1.5 to 2.5 years come from

    You have at least €150 burning a hole in your pocket and you don't know the first thing about property or letting! If the tenant doesn't go you have to open a dispute with the RTB for overholding. There is your first problem. You are not registered as the landlord! How are you going to register as landlord after you have parted with at least €150k. If you can't register, you can't open a dispute and the tenant can sit smirking at you, not paying rent while you cut the grass and pay the insurance.


  • #26
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    parkhouse wrote: »
    Interesting advice, How do I offer 5-10k to the tenant to leave, what is the process or the steps I need to follow? and what are my guarantee that the tenant will leave after the offer been given?

    There would be no guarantee, the approach would have to follow closing of the sale and that’s why you would budget 20k, ie assume refusal, court, sheriff etc for ultimate removal in 18 months or so. Only viable if you don’t need a (substantial) mortgage.


  • #27
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    Marcusm wrote: »
    There would be no guarantee, the approach would have to follow closing of the sale and that’s why you would budget 20k, ie assume refusal, court, sheriff etc for ultimate removal in 18 months or so. Only viable if you don’t need a (substantial) mortgage.
    There would be no mortgage with a delinquent tenant.


  • #28
    Marcusm
    Registered Users Posts: 10,183 ✭✭✭✭Marcusm


    4ensic15 wrote: »
    There would be no mortgage with a delinquent tenant.

    Not a standard one; some people might be able to raise an investor mortgage based on a reasoned legal view won the prospect of evicting the tenant. Even then it would be less than 50% LTV Max. Realistically that work would not be worth doing on a property of €150k.


  • #29
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    Marcusm wrote: »
    Not a standard one; some people might be able to raise an investor mortgage based on a reasoned legal view won the prospect of evicting the tenant. Even then it would be less than 50% LTV Max. Realistically that work would not be worth doing on a property of €150k.

    That banks don't want small mortgages. They are not going to go through that grief for a 75k mortgage. They would not have made a decision on it in a week either.


  • #30
    parkhouse
    Registered Users Posts: 19 ✭parkhouse


    It seems that all auction reviews I have seen until now all over the web tells you to keep away but at the end the properties are still sold over and over again... strange


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  • #31
    4ensic15
    Banned (with Prison Access) Posts: 4,691 ✭✭✭4ensic15


    parkhouse wrote: »
    It seems that all auction reviews I have seen until now all over the web tells you to keep away but at the end the properties are still sold over and over again... strange

    What is strange about it?


This discussion has been closed.
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