Sale of Tenanted Premises

 

This year has been tough and many investors are having to sell their investment properties to get by. As such, it is a timely reminder for those of you in sales to be refreshed on tenancy legislation and the rights of a tenant when it comes to the marketing, inspections and sale of the premises they are leasing.

Here are eight interesting tenancy laws that must be abided by when selling a rented premises:

1. At the beginning of the sales process, it is important to understand that the sales person MUST inform the property manager that they have an agency agreement for the sale of the premises, even if the sales person is of the belief that the vendor has already advised the property manager, it is your legal obligation to advise in writing.
2. Check the lease, it must be added to the Sales Contract and if it still is within its contracted period the property must be sold with the contract marked “Subject to existing tenancy” meaning the tenants and the lease stay and are effectively “sold” with the property.
3. Marketing – some agents may be surprised to know that you can NOT place a For Sale sign outside a tenanted premises without the tenant’s written consent.
4. Taking photographs inside the premises of a tenanted property can only be done in the 28 days before marketing starts.
5. To take photos inside the premises and publish/use those photos which may have a tenant’s property in those photos, the agent must obtain consent from the tenant in writing. Whilst the tenant is not allowed to reasonably refuse consent to use the photos, it is reasonable for tenants to withhold consent where they are in circumstances of domestic violence.
6. Showing the premises – the tenant must be given at least 14 days notice in writing before the first showing of the property. Whilst the tenant cannot unreasonably refuse to give access to the premises for the purposes of marketing, the salesperson must not request more than two inspections within a week and must provide at least 48 hours notice prior to an inspection.
7. Open Houses – a tenant can refuse open house viewings of the premises and request that inspections by appointment are done instead. Do not forget the tenant has the right to be in the premises when it is shown or to have someone there on their behalf.
8. On-Site Auctions – if the premises is a house (or an apartment and the auction is being held in the apartment and not on common property) the agent cannot hold the auction on-site unless the tenant provides consent – get this in writing and keep on your file.

Sometimes it will be easier to get a property sold when there are no tenants within a lease and not still residing within the premises. If the landlord or their property manager has a good rapport with their tenant, there may be no issues at all, but if the tenants are not happy about the sale of the premises or are being difficult with access, it may be wise for the vendor to hold off on the sale until the period agreement has expired and they are able to provide vacant possession of the property.