Selling a Tenanted Property – What are your Obligations to give Notice to Tenants?

In January, a landlord entered into an agreement to sell his property.  The property was subject to a fixed-term tenancy set to finish in early February, while the settlement of the sale, as agreed in the Agreement for Sale and Purchase, was to take place at the end of February.

Unfortunately, the landlord was unaware of changes to residential tenancy law that mean landlords can no longer rely on their fixed term tenancies to simply end on the date in the Tenancy Agreement.

The landlord found instead that they needed to give the tenant 90 days’ notice to end the tenancy, which now automatically rolls over from fixed-term to periodic. 

Settlement of the sale could not occur until the property was free of tenants and the landlord had to pay thousands of dollars in late-settlement fees, as well as the purchasers’ storage and accommodation costs while they waited to move into the property.

If you want your property to be considered by purchasers looking for their own home to live in, rather than purchasers looking for an investment property to rent out; your property should be sold with ‘vacant possession’, meaning there will be no one living in the property at settlement. Ensuring you can give vacant possession is a key thing to check before you sign any such Agreement.

It is important to take legal advice when selling your property, to avoid being caught in a situation like the above.

Guy Goodwin

Solicitor
Wellington