Monday, June 23, 2008

Buying Real Estate in Jamaica: Subject to Tenancy

As I had pointed out in an earlier post. The contract will usually state whether or not the property is sold with vacant possession. If yes the vendor must remove all persons and goods from the premises as the purchaser is entitled to possession. If the property is sold subject to existing tenancies however the purchaser is entitled to the rents and profits of the property apportioned as of the date of completion.

If the property is tenanted and the purchaser wants vacant possession, it is very important for him to be aware of the fact that unless the property is exempt under the Rent Restriction Act there are certain restrictions on a landlord/owner's right to possession of the premises as against a tenant. The landlord/owner who contracts to give vacant possession on completion is obligated to do so. He should therefore serve a notice in accordance with the Act but if the tenant does not leave in accordance with the notice, he must go further and obtain a court order for recovery of possession.

Many are of the view that the Rent Restriction Act is favourable to tenants. Some vendors, mindful of the potential delays and hassle of engaging in a court case, are therefore unwilling to offer vacant possession and prefer to sell subject to the tenancy.

In some cases too, the tenant gives assurances of their willingness to leave but then they renege as they too understand the benefits of residing in controlled premises.

On the other hand a purchaser who buys for investment purposes or who does not want to reside in the premises immediately may wish to keep the tenant. This purchaser should ensure that that tenant is one who honors his responsibilities, by making careful inquiries of the vendor/landlord of the terms of the agreement he has with the tenant and the extent to which the tenant has complied. It is that purchaser who after all will be the landlord on completion.