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Selling/Buying Subject to Tenancy

Selling/Buying Subject to Tenancy

When a property is marketed for sale, the Contract for Sale will state that the property is being sold with either:

  • Vacant possession – meaning the property will be vacant on the date of completion and the purchaser can move straight in if they wish or rent the property out;
  • Subject to existing tenancies – this means that at the date of the exchange of Contracts there is a tenancy agreement in place and a tenant in occupation of the property.

What to know if you are the Vendor/Seller with an existing tenant

If you are selling your property with an existing tenant, you as the Vendor have a right to show the property to prospective buyers however you must provide written notice to your tenant. Your tenant cannot unreasonably refuse a request to have prospective buyers inspect the property.

If there is a fixed-term lease agreement in place this cannot be terminated due to a sale and therefore the tenants lease remains on foot until the end of the fixed term.

At the time of completion when the property transfers from the vendor to the new purchaser, the tenant will continue to occupy the property in accordance with the terms of the tenancy agreement entered into with the vendor/seller. The purchaser, who after completion will be the registered proprietor of the property, then becomes the tenants new landlord.

If you are selling a property and there is a periodic lease in place, meaning it is recurring with no fixed end date, you as the vendor/seller can issue a Notice to Vacate giving the tenant 30 days’ notice in which to vacate the property if you wish to do so.

What to know if you are the Purchaser of a property sold subject to existing tenancies

If you purchase a property that is subject to an existing tenancy this must be marked on the front page of the Contract for Sale and a copy of the tenancy agreement must be attached to the Contract for Sale at the time of exchange.

When your conveyancer reviews the Contract for Sale, they will advise you of the tenancy and whether it is a fixed or periodic term.

If the tenancy agreement is periodic and your intention is to move into the property at settlement, you can instruct your conveyancer to send a request to the vendor/seller to issue a Notice to Vacate to the tenants and request that vacant possession is to be given at settlement. The Notice to Vacate period in this circumstance is 30 days from when notice is given.

Should you proceed with the purchase and chose to keep the tenants in the property, when you become the new owner and you wish to end the periodic tenancy, you as the landlord may issue the tenant with a Notice to Vacate. In this circumstance, you must give your tenants 90 days to vacate the property.

If the tenancy agreement is a fixed-term lease, the tenant cannot be ordered to vacate the premises until such time that the fixed-term has ended. This means that vacant possession may not be available at the time of settlement.

If you decide to continue and purchase a property with existing tenants on a fixed-term lease, the rent will be adjusted for at settlement and thereafter, you will become the new landlord and receive the rent and all obligations that come with being the landlord.

At the end of the fixed-term lease, you can provide the tenant with a Notice to Vacate which gives the tenant 30 days to vacate the property.

When purchasing a property where there is a tenancy in place you should seek advice from your conveyancer, especially if you are a First Home Buyer who requires vacant possession or wishes to move into the property so they can advise you of your options and if required extend the completion date so that vacant possession can be provided if required.

Please note, if you are a First Home Buyer, purchasing with existing tenancies may affect your ability to claim your First Home Buyer benefits.

Coutts is here to help

If you are selling or purchasing a property with existing tenants or have any concerns or questions regarding property law, don’t hesitate to contact Coutts. Our experienced team is here to provide you with expert guidance and protect your rights. Reach out to us today for personalised assistance.


Christine Johnsen - Narellan Family Lawyers

Christine is a Licensed Conveyancer and Justice of the Peace at Coutts’ Narellan office. Since joining Coutts Lawyers & Conveyancers in 2013, Christine quickly immersed her interest in the property and has since completed studies of Conveyancing Law and Practice at Macquarie University; and is accredited with the Australian Institute of Conveyancers NSW.

For further information please don’t hesitate to contact:

Christine Bassett
Licensed Conveyancer & JP
1300 268 887


This blog is merely general and non-specific information on the subject matter and is not and should not be considered or relied on as legal advice. Coutts is not responsible for any cost, expense, loss, or liability whatsoever in relation to this blog, including all or any reliance on this blog or use or application of this blog by you.

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