Giving notice to tenants when selling a property – make sure you get it right!

Kyle and Anna owned a property which they rented out on a monthly basis to a young couple. They put the property on the market and an interested buyer wanted to buy it to live in and therefore wanted the tenants to move out before settlement. Kyle and Anna thought they could terminate the lease by giving 3 weeks notice.

Unfortunately for Kyle and Anna, the minimum notice a landlord can give a tenant when a property is sold (that is, when the Agreement for Sale and Purchase is unconditional) is 42 days and they were stuck when the tenants insisted on 42 days notice. Fortunately they were able to come to an agreement with the purchasers to move the settlement date, otherwise they would have had to pay compensation to the purchasers for not being able to move in!

For both tenants and landlords, it is important to be aware of notice periods required if a property is being sold.

If tenants are on a fixed term tenancy, then unless the tenants agree otherwise, their tenancy cannot be terminated (even by sale of the property) until the term of the lease expires.

If the tenants are on a periodic tenancy, as in the above case, the notice period is 42 days from the day after the notice is given. If you are unsure, you should seek legal advice as you don’t want to be caught out.