This information has been provided by
Australian law firm, Australian Conveyancing Services and is applicable in Queensland
only.
A. The procedure
If you decide to sell a property that you own which is tenanted, you can, but you need to follow certain procedures. They are listed briefly below:
Firstly, the Seller or their Agent needs to give the
tenant a Form 10 (Notice of Lessor’s Intention to Sell
Premises). This form is signed by the Seller/Agent. The
form includes the address of the property to be sold and
a section on the sales strategy that the Seller will
employ (eg open house each Saturday for 6 weeks, then an
Auction on site on a specified date, etc).
Each time the Seller/Agent wishes to show the property to a prospective Buyer, they must serve another form (Form 9 Entry Notice) on the tenant, and giving at least 24 hours notice. The Form 9 is signed by the Seller/Agent and must be given each time that they want to access the property.
These forms are available for downloading from the Residential Tenancies site at
www.rta.qld.gov.au.
You can continue to charge the full agreed rental for the property (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 24 hrs 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. For instance, 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 sign a Contract whether you can legally do this.
Generally the rule is:
If your tenants are NOT on a fixed term tenancy (for instance if they have continued to rent the property beyond the period initially stated in the tenancy agreement), then you can terminate the tenancy by giving two month’s written notice (Form 12 Notice to Leave) on the tenants or 4 weeks notice once you have signed a Contract to sell. So your settlement date needs to be longer than that to make sure your tenants leave before settlement.
If your tenant is on a fixed tenancy then the tenants can remain in the property until the tenancy period to expires. If that period still has a distance to run, then you can either make the settlement date longer (so it goes past that date) or the Buyer will have to buy the property subject to the tenancy (they will be entitled to the rental payments from the date of settlement until the tenancy period expires).
