Singapore Expats

Hi there,

I have bought a property with an existing tenancy. The tenancy agreement with current owner is expiring before completion of the sale.

The current tenant would like to extend, so how do I craft out (with any agent's involvement) a new tenancy agreement? Do I need to have it stamped and duty-paid?

Can the current tenant signed this new tenancy agreement even before the completion sale? Must we wait for the completion of sale then? In that case, does the tenant have to renew current agreement with existing T&C with the current proprietor? What if the renewed T&C is below the rental rate than that I'm asking for?

Hope someone could help.

Thanks.

Well, completion of sale is just that. Until that occurs, the property is not legally yours and the existing owner can rent it out for whatever amount he considers reasonable and rent up to the point of completion accrues to him or her.

Any tenancy agreement signed before completion will be between the existing tenant and the pre-completion owner. You simply take over the tenancy upon completion. Of course your agent might come up with what he or she thinks is a creative way of getting round this legally, but a lot of agents have absolutely no clue what they're doing and may simply get you into trouble. They never admit to not having a clue either which is worse.

You could of course consult a lawyer, but this seems a small matter to be paying a fair bit of money for.

How much time do you have before completion? And how close is the date of the tenancy expiry to the date of completion?

Quite simply, you can and should attempt to discuss this issue with the property owner. By now, you should have their contact details, or at the very least their names with which you can contact them. Perhaps they and the tenants are willing to settle on a rolling contract up till the point of handover while you concurrently are discussing with the tenant a new agreement to begin on the day of the handover.

The existing owner is not likely to want to use the agent to negotiate a contract extension and pay a new commission to the agent if he or she is only going to collect a month or two of rent more.

Cut out the agent altogether in this process. The agent didn't find you this tenant, and the agent has also been paid for securing the original tenant (assuming it is the same agent) so there is no good reason at all for this agent to be trying to get anything out of this other than the satisfaction of having provided good service.

Having someone in the middle simply complicates things. Information gets miscommunicated, and often deliberately withheld. You try to work this out amonsgt 3 parties though an agent, you never know what was said to each and every party because the agent will almost certainly tell everyone what they want to hear.

No other way to say it, but really, issues like these are things you ought to have thought about and discussed with the property vendor before you even paid the 1% option fee.

But really, there is not very much you can enforce in terms of action because quite simply, you don't own the property until completion.

I would ask why you don't want to get expert advise (agent or lawyer).

There are multiple issues. You need to understand what the current owner is proposing to the tenants. If he is agreeing that they can keep it after the sale, then your contract with him should also indicate that you cannot throw out the tenants else, there are two cross purpose contracts being signed.

What you can do really depends on what is said in the tenants agreement and what is said in the contract for sale.

Hi, thanks guys for the great response.

I've read thru the tenancy agreement given to me later. The completion of the sales might be within +/- 1 week of expiry of the tenancy. In the agreement, the current tenant could renew the tenancy for 1 year at an agreed rental rate with written request 2 months before expiry of the tenancy.

This rate can be unfavorable to me, can I then approach the current owner beforehand to influence him to reject the renewal if the rate that the tenant asks for is below my expectation?

Can I approach the owner to grant me right to access to property during the 2 months preceding the expiry, to bring potential new tenants to view the premises?

Lastly, do I have to get the new tenancy agreement stamped for it to be legally binding? How could I do so if need be?

Thanks.

I'll answer the easy one

ajcc wrote:Lastly, do I have to get the new tenancy agreement stamped for it to be legally binding? How could I do so if need be?

Yes, just head over to the IRAS building in Novena. Stamping must be done within 14 days of signing or there are (small) penalties added to the fee.

http://www.iras.gov.sg/irasHome/page01.aspx?id=724

As mentioned , the best way is for you, the current owner and the tenant to trash out an acceptable lease and price.

Does you option or sales agreement say anything about the transfer of existing leases?

The current lease is between the current owner and the tenant. You are NOT bound by it unless there is a clause in your option or sales contract. If there is no such clause, worse case scenario if they are unreasonable, you can refuse to take over the lease. The tenant would then claim against the current owner. Of course this could get messy.

I would suggest signing a separate lease between the tenant and yourself. You can sign now for a lease starting after you take ownership. The tenant will technically be in limbo for a week. Something infomal between the current owner and tenant should cover that. Again, that's technically between the tenant and the current owner.

yes agree with BooneC

technically u r not bound by the tenancy agreement unless it is expressed otherwise in the said tenancy agreement between the tenant and the current owner
the said agreement will so-called be "ceased and void" when the "current owner" no longer has title to the property. if it is silent and there is a lack of a provision that the new owner shall continue or take over the tenancy agreement, it is again, not enforceable by the tenant
the above may entitle the tenant an eviction, but there are other recourse by this tenant eg. suing the "current owner" for breach of contract, damages etc etc

may i suggest not to go thru all the above route. no need to complicate your life as it is. all 3 parties should sit down and in good faith discuss and come to a compromise on a reasonable agreed rate, and to have a provision in the tenancy agreement to exercise or novate the tenancy agreement to you, the new owner

any contract is legally binding even if unstamped but to enforce a contract esp in the courts, it has to be stamped. agree with JP, u can do it yourself with IRAS at novena

apologies, noted it did not come out quite right

i had earlier jumped the gun and the assumption was that the seller n tenant will proceed to enter into the tenancy agreement between themselves

in a perfect document, both the tenancy agreement and sale agreement should have a provision governing tenancy transfer to the new owner

you are right to point out the sale agreement

re current situation, the current owner won't deny some cash before the completion period, and wish to take on/renew tenancy agreement with the tenant on their own agreed rate

signing behind the buyer's back is not very good practice n may be a breach of term under the sale agreement
the sale agreement more often than not, should contain protection clause such as seller's reps and warranties that the seller shall not enter into any agreement with third parties that shall have a binding effect on the seller, without consent of the buyer blablabla.

for the best of both worlds, or three, best for all parties to sit down to discuss, and this discussion should involve the property agent for the sale and purchase transaction. craft out another simple letter agreement for the seller, buyer and tenant on consent, agreed terms and rental rate

yes, eviction is a legal right of the buyer but it does comes with legal costs n time to apply for court order to enforce it. a tenant evicted cannot sue the buyer and can only sue the seller for damages etc

Thanks folks, will follow your advice to discuss with vendor and tenant to come to terms on extention of tenancy and acceptable rate.