Conveyancer didn't include rent in settlement

Any arrears prior to settlement are the previous owners problem

 

I thought that was pretty obvious too, not according to the PM though...

 

They can't recoup the arrears from you. That is the vendor's problem. You can only chase the current from change of ownership.

 

The usual position is that rent is adjusted in the settlement statement for commercial transactions but not residential. As has been mentioned, the property manager should be dealing with the rental adjustment and you should be requesting a copy of the rent ledger as a part of your due diligence. If the tenant is in arrears and you are not aware it is because you have not asked the question.

 

When I have clients tax info that includes a new IP I often see rental adjustments in the settlement if the existing tenant has rentals in advance etc. I would think that unless you instruct your lawyer correctly when buying then they wont adjust. They only know what they are told !! The reality is ALL tenants should be paying rent in advance so this issue should always be a concern. You could lose 2-4 weeks rent easy.

It would be sound practice for any buyer of a IP (either to be occupied by existing vendor or an arms length tenant) to ensure that settlement includes rents, bond, outgoings and that the lease issues and agency agreements are all in place. Also leaves any arrears squarely with the vendor. If such concerns exist the lawyer can advise on eviction etc before the problem esalates.

I know if I was buying a IP I want to ensure I received any rent paid to agency in advance just as I would expect to settlement share of rates, strata etc back to the vendor. The solicitor will communicate with the agency and vendors. Extra costs ? Sure.

 

We were of the belief it would be adjusted in settlement figures along with rates, water etc. so no specific enquiry was made with conveyancer. The agent told us verbally there were no rental arrears, something we will definately be asking via email and getting a response in writing in the future.

 

Great point @JDM..not always great to inherit a tenant

 

I expect this to be taken care of by solicitor, always be involved in the process as much as you can.

As far as insurance, would not help you if they were already in arrears, it would be like buying a car policy after you already had a smash. You should have known they were behind, if this is the same company your using now, and they did not disclose they were behind, I would not be using them as they are shifty IMO.

 

Diligent pm do Brisbane. Renee is very knowledge and on the ball.

Yes a pm can certainly apportion rent and do whatever a conveyancer missed. This happens regularly.

 

Just an update for anyone still watching the thread.

PM issued a breach notice, 2 weeks rent was immediately paid. They are now 5 days behind again, agent is going to issue another breach at 7 days and if not rectified shortly after a notice to vacate.

We have told them to carry out an inspection asap and prior to any notice to vacate to ensure no damage etc. in case things go bad and we need to make an insurance claim.

 

Check your insurance policy - may not be covered as they were in breach when you entered the agreement??

 

I am more concerned about property damage as opposed to loss of rent. I'll give them a call tomorrow and ask about loss of rent.

They are now involved in a dispute with next door over use of the common driveway (they keep blocking it) so all in all not great tenants to keep on.

Edit: I should clarify, we have separate building and landlord insurance. Building insurance was in place prior to settlement and covers accidental and mal damage by tenants.

 

Yeah, they likely wont pay for rent loss if they were already in breach when you got it and prior, but if they cause damage on purpose now, that should be covered, most people are not that stupid, they know what is coming and not everyone decides to do stupid things.

 

Sorry to hijack, what do you do with conveyancer who did not provide a full settlement letter instead sending in a cheque instructions letter and delayed response to get back on refund issue with the banks. I've had enough of the conveyance and wanted to use her.

 

Just move on and never use again and advise others to never use.....

 

Issue is I'll need the info from her. If I get another conveyancer she will not be able to get the info from the irresponsible one.

 

If your not settled, then it may be tricky, frankly, I am not even sure exactly what your issue is, but if the relationship has broken down, you may want to ask another if they can take over.