Selling IP before Tenant Lease Expiry

[Modal Harmony]

Hi All,

Just wondering what legal implications (if any) might occur for us to sell an IP before current tenant's lease has expired.

We are looking to fund another IP elsewhere and our mortgage broker feels our current situation won't justify the IP purchase to get the 80% LVR.

 

[bailz66]

I see these all the time on www.realestate.com.au

They normally say tenanted until x date

Im assuming that who ever takes over has to honor the lease agreement

 

[marg4000]

In Queensland any existing lease has to be honoured. The vendor cannot sign for vacant possession unless he/she negotiates with the tenants and gets them to agree to leave.

Not sure about other states.

If you are selling, maybe talk to your tenants and find out if they are prepared to move early. It may cost you a financial incentive, but you may consider it worth it.

We have previous sold IPs when the lease has only 8 -10 weeks to run, this gives investors the opportunity to buy a tenanted property with the possibility of lease renewal, but is also attractive to owner occupiers. If an owner occupier wants to buy, we simply arrange settlement after the lease expires having given the tenant appropriate notice.
Marg