In today’s cutthroat real estate market, it is possible that the property you purchase may already have tenants living in it. If you do end up purchasing property that is tenanted it is important that you are aware of your rights, the tenants rights, and to ensure that everything is done fairly within the eyes of the law.
Vacant Possession:
If you are buying a property that does not have any existing tenants that will be holding over as residents, you agree to take a vacant possession. This means that if you do want to rent the units, you will be responsible for advertising, vetting, and securing new tenants.
Existing Tenancies:
If you decide to buy a building that has existing tenants who will remain on the property, you are buying subject to the existing tenants. This means that upon the closing of the sale of the property, you will have existing tenants in the building.
If you are buying a tenant occupied property you should receive the following information from the seller:
- The front page of the contract for sale will indicate that there are tenants present on the property
- The contract for sale will have the tenants lease agreement attached to it
- The lease agreement will indicate if the lease is a fixed term lease or a periodic term lease
Types of Leases
If you are taking over a property where the tenant has a periodic term lease and you want them to vacate, you can request your conveyancer to send a Notice to Vacate to the existing tenants. The tenants will then have 30 days within which to vacate the premises.
If you allow the tenants to stay on under a period term lease, once you take possession of the property you can still send a Notice of Vacate, but this will allow the tenants 90 days within which to vacate the premises.
If the tenant has a fixed term lease, you will not be allowed to request they vacate the premises until the end of the term of the lease. In this instance, you will become the landlord and all rents will be due and owed to you as the new owner.
After the fixed term lease expires, you will be allowed to give the existing tenant a Notice of Vacate. Once this Notice to Vacate has been given to the tenant, they will have 30 days to vacate the premises.
Considerations When Keeping Existing Tenants
Once you have all of the information about what type of lease the existent tenants have, it is time to consider what you want to do. Before deciding to keep existing tenants in place it is important to do the following;
- Ask the current landlord and/or the sales agent if the current tenants have paid their rent on time on a regular basis
- Are the current tenants clean both in and around their unit?
- Are all current tenants employed and/or financially stable?
- When was the last time the tenants credit rating was run?
- When was the last time the tenant’s employment was verified?
- Are the current tenants quiet and respectful of the other tenants?
- Do the current tenants request maintenance on a regular basis and/or expediently report issues so that they can be fixed in a timely manner?
Lastly, you should consider meeting any of the tenants that will be holding over to review any new policies or rules you will be putting in place. You should also address the question of immediate and/or future plans to raise the cost of the rental unit once the current leases are up. You might also want to consider if you will be offering discounts on rental units based upon responsibilities the tenant might prefer to take on, such as the cost of smaller maintenance issues.
In the event that you find yourself in need of assistance, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.