NSW Tenant Rights During Sale of Property

[eXc]

Hi All,

Anyone able to answer this for me? I looked around here and on govt sites. I found information for somone outside of a contract, but not within.

I have some friends that are all excited to have moved out of their old small flat into a house they had hoped to be long term tennants for. They found out yesterday, about a month after they moved in, that the house is actually for sale, it was for sale before the moved in.

They were not informed of this until yesterday, when a pest inspector showed up asking for access and were told by the pesty that the house for sale!

So my question is: they have a 6 month contract (about 5 months now). Can the new owner force them out prior to the end of their contract?

thanks

 

[Terry_w]

Hi All,

Anyone able to answer this for me? I looked around here and on govt sites. I found information for somone outside of a contract, but not within.

I have some friends that are all excited to have moved out of their old small flat into a house they had hoped to be long term tennants for. They found out yesterday, about a month after they moved in, that the house is actually for sale, it was for sale before the moved in.

They were not informed of this until yesterday, when a pest inspector showed up asking for access and were told by the pesty that the house for sale!

So my question is: they have a 6 month contract (about 5 months now). Can the new owner force them out prior to the end of their contract?

thanks

Basically, no. Th house is sold subject to the tenancy.

 

[Dazz]

Can the new owner force them out prior to the end of their contract?

No....but it gets very interesting when the Seller goes and promises the world to all potential Buyers via the Contract of Sale that they will deliver vacant possession.

That's when the teardrops start.

 

[Jacque]

Ah yes the vendor may struggle, especially if an owner purchases and wants vacant possession. In these cases, it's not uncommon for the landlord/vendor to pay out the tenants as a form of compensation.

 

[The Fence]

Im pretty sure there is now no contract as the landlord is supposed to inform the tenant if the property is for sale BEFORE signing any agreements.

Cant find it written but I did read it somewhere.

Will keep chasing.

EDIT:

Found it.




When a property is put up for sale
If a landlord notifies their intention to sell the premises during the fixed term of a tenancy agreement and did not disclose the proposed sale before signing the agreement, the tenant can terminate the lease with 14 days notice and doesn't have to compensate the landlord for the early termination.

 

[The Fence]

Further to this it states in the standard residential agreement terms and conditions thus:

Possession of the premises

13. The landlord agrees:

13.2 to take all reasonable steps to ensue that, at the time of signing this agreement, there is no legal reason why the premises cannot be used as a residence for the term of this agreement.

 

[Jacque]

Hi TheFence

Whilst all the above is valid, your question was about the landlord forcing the tenants out. Yes, the tenants can provide 14 days due to the sale situation and elect to move out but the landlord is still bound by the lease. I thought they wanted to stay the 6 mths?

 

[Dazz]

The Landlord is bound.

The Tenant is not bound.

Like for all ressy stuff.

 

[eXc]

Thanks all

Yes, the tenants don't want to move.


Sounds like the answer is as I thought. That is that they can stay

 

[wylie]

The Landlord is bound.

The Tenant is not bound.

Like for all ressy stuff.

You know that both are bound, but whether or not the landlord can force the tenant to pay what is legally due if they break the contract is the issue...

 

[Meisterin]

If it's in NSW it's likely that the sales contract states it is subject to tenancy and will have a copy of lease attached to it.

If the purchaser wants to move into the property, s/he may negotiate the settlement date to the end of lease date and move in.

Otherwise, the purchase may want to keep the property as investment property and keep the tenant.

 

[Dazz]

You know that both are bound, but whether or not the landlord can force the tenant to pay what is legally due if they break the contract is the issue...

In the vast majority of cases, for the vast majority of incidents, the Landlord cannot force the Tenant to do anything.....hence the Tenant is not bound.

In this particular situation, once again, the Landlord / Seller can do nothing.

Whether they try and bluff their way thru is another matter entirely, but as usual, the Landlord doesn't have a legal leg to stand on.

This exact scenario happened to one of my former work colleagues. He was the long standing (over 12 years) Tenant, and not affected by bullying tactics.

The Landlord had foolishly tried to sell with the promise of vacant possession in the Sales Contract. There was 8 months remaining on the Lease.

The REA didn't ask about the Lease, nor see a copy of it, nor did the Landlord disclose the details of the Lease to the REA. He told the REA that the Tenant was on a rolling period Lease, hoping to bluff him out.

Along came a lovely young 22 yo lady who was a diligent saver and good worker. My friend during the harrowing process got to know her well, and she was a lovely girl. Lots of argy bargy between the REA and the Tenant leading up to settlement, but nothing achieved. Final inspections were a nightmare, with sticky questions asked by the Buyer about why hasn't the Tenant moved out yet....with bluffing and lies being told to her by both the REA and the Seller.

Settlement came and went, with the young girl fully expecting to shift in the day after. My friend said he took the day off work and sat at home with all doors locked and side gates blocked. Her truck full of furniture arrived, with all of her worldly goods and her Dad arrived for support.

As usual, all of the legal rights are with the Tenant, the young girl and her father and the truck driver couldn't do a damn thing. The real culprit was the Seller, who promised vacant possession upon settlement.

They all eventually left, and my friend remained in the house for the remainder of his Lease, upon which he quietly and voluntarily left, and she moved in. My friend never found out what happened to the Seler, but the Buyer certainly would have incurred losses as a result, and should have sued him for those losses.

I couldn't understand how a settlement could go through that promised vacant possession but didn't deliver it.

Anyway, the strength of a Lease certainly over-rides any sales transaction clauses between present Landlords and future Landlords.

 

[Scott No Mates]

I couldn't understand how a settlement could go through that promised vacant possession but didn't deliver it.

Anyway, the strength of a Lease certainly over-rides any sales transaction clauses between present Landlords and future Landlords.

Great example/story Dazz. Maybe residential leases should be able to be registered on title to 'protect' the rights of tenants as they have a caveatable interest (I'm sure you'd agree - NOT!).

 

[DaveM]

Interesting story Dazz and probably not that uncommon

I do know that if something I buy is tenanted my soli will dig around with the vendors soli for evidence of the actual lease status before he will allow it to go unconditional.

If its marked subject to tenancy he gets the details of the current lease from the leasing agent as the attached one may be old (eg renewed since). If its vacant possession again gets the details of the lease, and writes in a special condition that settlement will not proceed until the property is vacant.

In other good news, my old office (CIP inside SMSF) had a negotiated offer to lease on it yesterday at just under asking price (about $900pa under), has been empty 2 months so not bad for end of year leasing in Norwest.

 

[wylie]

There are plenty or stories where a lease is ignored but it IS a legal document to be honored by both parties. It is true that mostly it is not worth pursuing but that doesn't change the lease from being a binding contract for both parties.