Landlord Guide: Selling a Property with Tenants or Vacant Possession in NSW

KEY TAKE-OUTS:

• What does “vacant possession” and “subject to existing tenancies” mean?
• What are the grounds on which you can end a tenancy agreement?
• As a landlord, how much notice do you have to give?

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Selling “subject to existing tenancies”

If you currently have tenants and are selling the property “subject to existing tenancies,” this means the tenants will remain in the property after settlement. The new owner will take over as the landlord and will be bound by the terms of the existing lease. Your conveyancer or solicitor will include a copy of the current lease with the Contract for Sale.

When the contract is marked as subject to existing tenancies, you (the seller) are responsible for notifying your managing agent that the property has been sold. You must also ensure that any rent owing (in arrears) is collected before settlement, as no adjustments will be made for unpaid rent. It’s important to instruct your managing or leasing agent to appropriately apportion any rent paid in advance between you and the buyer, and to arrange the transfer of the rental bond to the new owner.

 

Selling “with vacant possession”

If you have tenants and intend to sell the property with “vacant possession,” you must ensure that the tenants have vacated the premises before settlement. This requires serving the tenants with a written and signed termination notice, which can be delivered in person, by mail, or by email. The notice must state the reason for ending the tenancy and include any supporting documentation demonstrating that the grounds for termination are genuine. In this instance, you may provide a copy of the termination notice along with the Contract for Sale or the Agency Agreement.

 

What happens if you want to renovate or move into the property after settlement?

If you have recently purchased a property “subject to existing tenancies” and wish to move in or undertake significant repairs or renovations, you must serve the tenant with a termination notice specifying the reason (grounds) for ending the tenancy and comply with the required minimum notice period. The notice period depends on the type of tenancy.

You can read more about the grounds for terminating a tenancy agreement here.

 

What must the termination notice include?

• The address of the property

• The date the tenant must move out

• The reason (grounds) the tenancy is being ended, and

• Documents that support the reason for ending the tenancy

 

As a Landlord, how much notice do you have to give?

The required notice period depends on whether the tenancy is fixed-term or periodic, the duration of the agreement, and the specific grounds for termination.

 

Types of Tenancy Agreements

• A fixed-term agreement: for a period of time and has a specific end date (e.g. for 6 or 12 months).
• A periodic agreement: where a fixed-term (specific end date) has not been specified in an agreement or where the fixed-term of an agreement has expired. If the fixed term has expired and the tenant hasn’t signed a new lease, the terms and conditions of the tenancy agreement still apply on a month-to-month basis.

The term of the lease can be found in the lease agreement.

 

Minimum Notice Periods

The minimum notice periods listed below apply to the situations discussed in this article.

Source

Disputes

As a landlord, it is important to follow the law and procedures when ending a tenancy, otherwise the tenant can apply to the Tribunal to challenge the termination notice.

On the other hand, if a tenant fails to vacate the property by the termination date specified in a notice issued by the landlord or agent, the landlord may apply to the Tribunal for an order of eviction. The landlord or agent must ensure that the eviction is carried out in accordance with the proper legal process.

More information can also be found on the NSW Fair Trading “Termination Information Statement”

Buying with “vacant possession”

When purchasing a property with “vacant possession,” you will receive it free of occupants and cleared of all personal belongings and furniture. The property needs to be in a reasonably clean state, and the Vendor is responsible for maintaining the property in the same condition as it was at the time of exchange.

 

Need Help Navigating Tenancy or Sale Obligations?

Whether you’re a landlord preparing to sell a property, a buyer purchasing with existing tenancies, or you simply need guidance on serving valid termination notices, Coutts Lawyers & Conveyancers can help. Our experienced Property and Conveyancing team can review your contract, advise on your rights and obligations, and ensure every step of your transaction complies with NSW tenancy and property laws.