This information has been provided by
Australian law firm, Australian Conveyancing Services and is applicable in New South Wales
only.
A. The procedure
If you decide to sell a property which is tenanted, you can proceed to list it with an agent, or advertise it yourself, confident that you can show prospective purchasers through the property. The standard Residential Tenancy Agreement in New South Wales allows the Seller to show the premises to prospective buyers, on a reasonable number of occasions if the tenant gets reasonable notice on each
occasion.
NOTE: Unless the tenant agrees, access is not permitted on Sundays, public holidays or outside the hours of 8am to 8pm.
If you and your tenant are unable to agree upon what is 'reasonable', then the Tribunal will on application make an order. The Tribunal will resolve any disputes if one party believes the other is being unreasonable. Access to show buyers can occur at any stage during the
tenancy.
As Seller, you are entitled to charge the full agreed rental for the property until the tenancy is legally terminated (the law does not require you to reduce the rent whilst the property is on the market, even though it may inconvenience the tenant).
B. Selling with or without tenants?
This is a commercial decision for you to make – some Agents will say that it is much easier to sell a property without tenants in it, because the law requires the Seller/Agent to give notice whenever they want to bring through a prospective buyer. Also, if your tenants are not tidy or co-operative, they may hinder the sale of your
property.
However against these considerations you need to also weigh up the fact that whilst your tenant remains in the property, you continue to receive full
rent.
Another consideration is whether a prospective Buyer is likely to want vacant possession of the property, or whether it is more valuable (return wise) as an investment property which is tenanted (an expensive house in a family area is more likely to attract owner occupiers, whilst a Unit in a large complex may be more likely to be purchased as an investment).
Buyers who want to live in the property will want vacant possession on settlement, and you need to determine BEFORE you exchange a Contract for sale of the property whether you can legally do this. Generally the rule is:
Fixed Term Tenancy (a tenancy that is for a specified period of time and ends on a specified
date)
You may terminate a fixed term tenancy upon giving at least fourteen days notice given at any time
prior to the expiration of the term. This means that
the tenancy may be terminated at the expiry of the fixed
term providing at least fourteen days notice is given prior
to that expiry date, or after the expiry date, namely at the
expiry of the period given under the notice. If the expiry
date of the tenancy is not for some time, you may choose
either a settlement date under the contract which occurs
after the expiry date, or to sell the property subject to
the tenancy. If the purchaser is agreeable, the purchaser
takes over the tenancy from settlement, and will be entitled
to the rental payments from the date of settlement until the
tenancy period expires.
Continuing Agreement Tenancy (a tenancy which does not
end on a specified date, usually where the tenant is
holding over under an expired fixed term tenancy)
You may terminate a continuing agreement tenancy by giving 60 days notice on the tenants or 30 days notice once you have signed a Contract to sell
provided you have given the tenant a notice of your
intention to sell the property. You need to ensure that the settlement date agreed upon with the purchaser is a date later than the date of expiry of the notice given to the tenant, so that you are in a position to give vacant possession of the property at settlement.
