When you make the decision to sell your property investment, it is important to be aware of the legislative protocols involved. Though the sales agent should be aware of these, often their focus is on the sale and not on the tenancy. Failing to follow the correct procedure can affect the sale contract process and cost you money.
Blogger: Diane Bukowski, Managing Director, Eezirent Pty Ltd
If you are going to use an agent to sell your investment property, audition them by questioning how they handle selling tenanted properties and their knowledge of the rules involved.
The specifics of state guidelines will be discussed later; here are three basic points that cover all locations:
• Status of the lease
• Photos and inspections
Rule number one in selling a rented property is to maintain clear communication with the tenant. Regardless of the legislative guidelines, the inspection and sale process will only run smoothly with the co-operation of the tenant. This is more likely to happen if the tenants are fully briefed on the situation and their privacy is respected. Again, stress this to the sales agent. The situation is not the same as selling an ‘owner occupied’ property, where it is often possible to conduct inspections at very short notice. The sales agent must follow the agreed arrangements.
It is important to know the status of the lease. If a fixed term lease is in place, the tenant has the right to remain in the property until the end of the lease – even if the property is sold. It is not correct to think that the lease lapses because of the change of owner. It may be possible to negotiate for vacant possession if you require it, or the tenant may prefer to leave. Such an outcome needs to be put in writing and signed by both parties.
If the lease is periodic, then it may be possible to provide ‘vacant possession’ to the new owner. In this instance it is vital to calculate the correct notice period for terminating the lease, so that it synchronises with the settlement date if necessary.
Again, the tenant’s right to privacy and ‘quiet enjoyment’ must be paramount. The tenant may object to having personal possessions included in photographs or video footage – this is their right. If the tenant objects, ask them what their specific issue is and try to work around it. The concerns are usually around possessions such as audio-visual and computer equipment. It should be possible to take internal photographs without the focus being on such items.
The best way to deal with access for inspections is to plan a schedule of open homes, rather than have inspections by appointment. With this approach, tenants can plan their activities around the inspections. This is another point to raise with the sales agent. Best practice is that there should be no unaccompanied inspections on tenanted properties to protect the belongings of the property. This means that the sales agent ought to accompany people as they move through the property.
Ultimately, tenants cannot prevent the sale of a property. Even under a fixed term lease, a tenant cannot say “I have a lease, I am not letting you sell the property.” A tenant cannot prohibit the taking of photos, the conducting of inspections or the installation of a for sale sign. You don’t want to end up in dispute resolution or the Tribunal to achieve these things. This is why a courteous and inclusive approach to the tenants usually ensures a positive outcome for all.
ACT: Inspection arrangements are to be agreed with the tenant. 24 hour’s written notice must be given for each inspection.
8 week’s written notice for vacant possession
NSW: Inspection arrangements are to be agreed with the tenant. If agreement cannot be reached, no more than two inspections can be conducted in a week, and 48 hour’s notice must be given.
90 day’s written notice for vacant possession
NT: 24 hour’s notice must be given for inspections, and the “Landlord must be reasonable about the amount of inspections.”
42 day’s written notice for vacant possession
QLD: If the property is put up for sale during the first two months of a fixed lease, and the tenant was not given written notice about this prior to signing the lease, the tenant has the option of terminating the lease with two week’s notice.
A Form 10 Notice of Lessor’s Intention to Sell Premises must be issued when the property goes on the market.
Arrangements for the taking of photographs, inspections and onsite auction must be in writing. Form 9 Entry Notices must be issued for each inspection.
Four week’s written notice for vacant possession.
SA: Inspection arrangements are to be agreed with the tenant. Suggested guidelines are one open inspection per fortnight, giving at least four day’s notice and two inspections per week, by appointment only, giving at least 24 hours notice.
60 days written notice for vacant possession.
TAS: Accompanied inspections can occur at any time with the agreement of the tenant. If an agreement cannot be reached, inspections by prospective purchasers can only occur:
• In the company of the owner;
• Between 8am and 6pm;
• With 48 hours written notice;
• On not more than 5 occasions in any week; and
• On not more than 1 occasion per day.
28 day’s written notice for vacant possession
VIC: Inspection arrangements are to be agreed with the tenant. 24 hour’s written notice must be given for each inspection.
60 day’s written notice for vacant possession – the tenant can move out before this end date by issuing a Notice of Intention to leave giving 14 day’s notice.
WA: Inspection arrangements are to be agreed with the tenant and should take into account the tenant’s convenience. They can be conducted and ‘any reasonable hour and on a reasonable number of occasions after giving reasonable notice.’ Despite their fondness for the term, no definition of reasonable is provided.
30 day’s written notice for vacant possession
About Diane Bukowski
From school teacher to website entrepreneur, Diane Bukowski is the managing director of Eezirent – an online service delivering professional tools to self-managing landlords.
After many years running an award winning real estate office, Diane took up the challenge offered by her business partner to set up a service that would level the playing field for self-managing landlords. The result is Eezirent which allows these investors to advertise their property on www.realestate.com.au, verify their applicants with the National Tenancy Database, and access the documentation and knowledge needed to efficiently manage a lease.
Diane’s blogs aim to provide practical advice to the self-managing landlord.