Are you considering buying a house with a tenant? This hypothesis may be viable for various purposes, such as continuing to make it available for rent, using it for private housing or carrying out new projects.
However, the New Urban Lease Regime gives tenants expanded protections to promote rental stability. Therefore, it is essential to know the following points in detail.
If you are going to buy a house with a tenant, pay attention to these aspects:
1. Analyze the lease contract
To analyze everything carefully before buying a house with a tenant, ask for a copy of the current lease agreement. This will help draw conclusions about the viability of the business.
2. Minimum duration and renewal
Keep in mind that tenants’ rights include a minimum contract length of one year and mandatory renewal after three years. Therefore, if the contract is recent, you will only be able to enjoy the property in the short term if you reach an agreement with the tenant.
3. Priority when purchasing
If you express interest in buying a house with a tenant, be aware that the tenant has the preemptive right to purchase. If the person cannot or does not want to buy the property, then the sale is open to third parties.
Additionally, the sale value of the house must be equal to or greater than what was communicated to the tenant.
4. Termination of contract for own housing
If you intend to use the house for your own housing or that of your first descendants, you incur the obligation to pay one year’s rent to the tenant. Furthermore, you cannot have your own home in the same municipality and you must be the landlord of the property for more than two years. So, in practical terms, if you buy a house with a tenant in 2023, you will only be able to claim it in 2025.
Communication to the tenant must be made in advance as defined by law and include the reason for termination and the intended vacancy date.
5. Deep works or demolition
If you want to buy a house with a tenant and then demolish the building or carry out extensive works, termination of the lease contract is only permitted if the work results in a property with characteristics differentand where it is not viable to maintain the lease. Illustrative examples include buying a floor to turn into a store or demolishing a building to build a villa.
notification to the lessee must be made in writing at least six months in advance, together with proof of prior inspection of the work.
6. Notification when the contract is about to end
If it’s not long before the lease comes to an end and, as the new owner, you want to report it, know that you must respect the communication deadlines:
・240 days in advance for contracts of six or more years;
・120 days for contracts between one and six years;
・60 days for contracts of less than one year.
7. Special tenant protections
If you buy a house with tenants who are over 65 years old or are disabled, and whose contracts date back to before 1990, you cannot force them to vacate. The same applies to tenants who have lived in the property for more than 15 years.
The contract can only be terminated if both parties reach an agreement or if they intend to demolish or carry out extensive works on the housing.
8. Resell while the contract is in force
It is permitted to buy a house with a tenant and then sell it to new owners. However, do not forget that, if the property has been leased for more than two years, the tenant has priority in the purchase. Therefore, you must give the tenant a letter with payment conditions, price, deadlines and date. The tenant has 30 days to respond to the proposal.
If the tenant waives the right of preference, then he can sell the property to third parties. You must notify the tenant of the sale, the identification of the buyer and the fact that the new landlord will assume all responsibilities relating to the lease and the house.
9. Long-term lease
If you want to buy a house with a tenant and continue to make it available for rent, you avoid many of the concerns we have listed. The new rental law offers benefits to landlords, such as lighter taxation, in order to encourage long-term rentals.
10. Lifetime lease agreement
Checking the duration of the current contract is essential if you plan to buy a house with a tenant. Typically, the maximum term for a lease is 30 years. However, the Real Right to Durable Housing can be verified.
This right allows tenants to reside permanently in a home, paying an initial deposit and a monthly installment.
If the tenant constantly complies with these obligations, termination of the contract only appears possible if both parties agree.
11. Lack of written contract
It is mandatory that there is a written lease contract between the tenant and the owner, although not everyone complies with this duty. If, before buying a house with a tenant, you find out that there is no written contract, then the tenant must prove that he has lived in the house and that he has been paying rent for six months or more. Additionally, the contract becomes part of the indefinite duration lease.
At DECISÕES E SOLUÇÕES, we accompany you in every step of buying or selling a home, as well as in other areas of mediation. Through our blog, we also equip you with lots of useful content and practical tools to navigate the real estate market with confidence!
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