When a property is being marketed for sale, the Contract for Sale will specify whether the property is sold with either:
Important information for Vendors/Sellers with existing tenants: If you are selling a property that has a tenant, you have the right to show the property to potential buyers. However, it is essential to provide written notice to your tenant. The tenant cannot unreasonably refuse the request to allow prospective buyers to inspect the property.
If there is a fixed-term lease agreement in place, it cannot be terminated due to the sale. Therefore, the tenant’s lease remains valid until the end of the fixed term.
During the completion process, when the property is transferred from the vendor to the new purchaser, the tenant will continue to occupy the property according to the terms of the tenancy agreement established with the vendor/seller. Once the completion is finalized, the purchaser becomes the new landlord for the tenant.
If you are selling a property with a periodic lease (meaning it has no fixed end date), as the vendor/seller, you can issue a Notice to Vacate, providing the tenant with 30 days’ notice to vacate the property if you choose to do so.
Important information for Purchasers of properties sold with existing tenancies: If you purchase a property that is subject to an existing tenancy, this should be clearly indicated on the front page of the Contract for Sale. Additionally, a copy of the tenancy agreement must be attached to the contract during the exchange.
Upon reviewing the Contract for Sale, your conveyancer will inform you about the existing tenancy and whether it is a fixed or periodic term.
If the tenancy agreement is periodic, and your intention is to occupy the property upon settlement, you can instruct your conveyancer to request the vendor/seller to issue a Notice to Vacate to the tenants. This notice would require the tenants to vacate the property within 30 days of receiving the notice.
If you proceed with the purchase and decide to keep the tenants in the property, once you become the new owner, you have the authority as the landlord to terminate the periodic tenancy by issuing a Notice to Vacate. In this case, you must give your tenants a 90-day notice period to vacate the property.
If the tenancy agreement is a fixed-term lease, the tenant cannot be required to vacate the premises until the fixed term has ended. Consequently, vacant possession may not be available at the time of settlement.
If you choose to purchase a property with existing tenants under a fixed-term lease, the rent will be adjusted during settlement. Subsequently, you will become the new landlord, assuming all the responsibilities and obligations associated with it.
Once the fixed-term lease ends, you can provide the tenant with a Notice to Vacate, allowing them 30 days to vacate the property.
When purchasing a property with an existing tenancy, it is advisable to seek advice from your conveyancer, especially if you are a First Home Buyer seeking vacant possession or intending to occupy the property. Your conveyancer can guide you regarding your options and, if necessary, extend the completion date to ensure vacant possession is possible if required.
Please note that if you are a First Home Buyer, purchasing a property with existing tenancies may affect your eligibility to claim First Home Buyer benefits.