Sale blocked to Local Authority by covenant in Lease- tenant taking legal action against management agent.

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OGC222

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I have a HAP tenant in an apartment in North Dublin. We have decided to sell property and explored tenant in situ scheme at request of tenant. A long 9 months later went sale agreed with Fingal County Council to purchase the property and the tenant stays.

The sale falls through due to a covenant in lease that the property cannot be assigned to a local authority .

I accept this ( disappointed ) as seller and reissue a new notice to terminate lease to tenant.

Tenant has got free legal aid and they are taking a case against the complex through the management agent for discrimination. The tenant has been living in the complex for 10 years with no issue and the covenant is unfair, unjust and discrimination in the middle of a housing crisis. She will be left homeless with 2 children, 1 with a lot of additional needs.

Management agent is taking legal advice, and has advised me tenant might win…

I presume this legal mess will keep the tenant in the property as long as the case goes on?? Presuming I need my own solicitor or can I reply on the solicitor the management agent uses for the complex.

I can’t find any cases similar unless it comes to renting and not purchasing.
 
You are free to sell to someone else, though you run the risk of the tenant refusing to leave.
 
Leo said:
You are free to sell to someone else, though you run the risk of the tenant refusing to leave.
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I'd be very surprised at anyone agreeing to buy with this case outstanding.

I think OP, you are stuck for now, until this claim is resolved.

Edit to add - proceed with your notice to quit etc., you are aware now that tenant is unlikely to leave & if / when claim against management agency is resolved your notice is still valid.

So far as the claim itself is concerned, I'd stay well away from it. You are not a party to it, so don't make yourself one.
 
Leo said:
You are free to sell to someone else, though you run the risk of the tenant refusing to leave.
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the plan is to sell which lease legally ends. I am curious if anyone with legal knowledge knows if the tenant has a chance here to win her case, would it be compensation she would get ( this would be at a cost to all the owners 90 units ) or could she force this covenant to be removed. The original developer who wrote the lease is long gone.
 
DannyBoyD said:
I'd be very surprised at anyone agreeing to buy with this case outstanding.
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The case will be between the tenant and the management company on the fairness of that stipulation, I don't see how that could prevent the sale of the apartment.

David Hall and others have campaigned for the outlawing of such covenants, the Government response was legislation would be required to do so but it wasn't an issue the Dept. of Housing saw as an issue or were prioritising at this time.
 
DannyBoyD said:
Do you know anyone who would be willing to buy this apartment except at a firesale price?
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The court action can't impinge on the OP's property rights, it's not an action against the OP nor their title. It could not affect the lawful sale of the property unless they seek a separate injunction preventing the OP from selling or evicting while the action is in progress, which would be a long shot I'd imagine. Without an injunction, any prospective purchaser will be completely unaware or the action, and searches against the title will come back clean.

If the tenant is successful, which previous government feedback on the topic has suggested might be unlikely, they can only succeed in having the covenant declared invalid and no more. By the time it gets resolved the LA will likely have moved on and the tenant will be left with a hollow victory that may only benefit others.
 
Leo said:
any prospective purchaser will be completely unaware
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Purchaser will be very aware theres an overholding tenant! And said tenant will very likely be only too happy to let any prospective buyer know about their claim.

Would you honestly buy into this?
 
I would not be putting the property up for sale until it is vacant. I have just got clarification that claim/case will be against all owners of the management company so all 90 apartments. If this case it could potentially hold any unit from selling not just mine. I hoping there can be some agreement between the owners to remove this covenant
 
DannyBoyD said:
Purchaser will be very aware theres an overholding tenant!
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Hold on, you first claimed it was the pending court case that would put them off, now they're going to be aware there's an overholding tenant even though a NOT hasn't been issued yet?
 
OGC222 said:
If this case it could potentially hold any unit from selling not just mine.
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The primary risk is a potential purchaser being put off by the minimal chance that the LA will somehow find the funds to purchase a lot of units in that one development. Some people might regard that as a risk to the upkeep, others might welcome more LA ownership.
 
I never stated I intended to put the property for sale with the tenant on notice to leave.

My worry is the tenant could get a stay on the notice of termination due to the taking legal case of discrimination.
 
Leo said:
This is a very important issue for the OP, making false claims ...advice
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did not "claim" or offer "advice" - asked a question - re read; this bickering is unbecoming.

From OP " I accept this ( disappointed ) as seller and reissue a new notice (my emphasis) to terminate lease to tenant."
 
OGC222 said:
I never stated I intended to put the property for sale with the tenant on notice to leave.

My worry is the tenant could get a stay on the notice of termination due to the taking legal case of discrimination.
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Even if they don't get a stay, I'd plan for them overholding. In the meantime keep up your regular inspections & make sure rent is paid.
 
DannyBoyD said:
did not "claim" or offer "advice" - asked a question - re read; this bickering is unbecoming.
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Did you not say:
DannyBoyD said:
I'd be very surprised at anyone agreeing to buy with this case outstanding.

I think OP, you are stuck for now, until this claim is resolved.

Edit to add - proceed with your notice to quit etc., you are aware now that tenant is unlikely to leave & if / when claim against management agency is resolved your notice is still valid.
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So that is not advice?
 
Leo said:
Did you not say:


So that is not advice?
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re sale of property: my post is in pretty clear English.

Danny:

1. "I'd be very surprised at anyone agreeing to buy with this case outstanding"
This is an opinion.

2. "Do you know anyone who would be willing to buy this apartment except at a firesale price?"
This is a question.

3."Would you honestly buy into this?"
This is a question.

You translated this in your own head to:

Leo: "..making false claims that they'll only be able to sell at a fire sale price is very poor advice. "

Now, time for a cuppa & move on.
 
DannyBoyD said:
2. "Do you know anyone who would be willing to buy this apartment except at a firesale price?"
This is a question.
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If that was anything other than a rhetorical question it was pointless. Whether I as an individual know of a person who is willing to buy an apartment that is unknown to me is entirely irrelevant.

Advising the OP the wait until legal action that had no bearing whatsoever on their rights and might take years to resolve is really poor advice. You can accept that then we can move on, otherwise best keep clear of such topics.
 
T McGibney said:
When did the opinions of individual contributors here become a substitute for professional advice?
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Who suggested they should not take legal advice?

As you say, the OP asked whether they were stuck in that situation until any case was resolved. Danny suggested the OP was 'stuck for now, until this claim is resolved.' I simply pointed out that was wrong, and any action seeking to have the covenant set aside could not mean the OP was stuck in that situation.
 
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