Selling A Tenanted Property (NSW)
When a tenanted property is sold, the buyer must honour any tenancy agreement in place. Laws which govern the sale of a tenanted property in New South Wales are contained in the Residential Tenancies Act 2010 and the Residential Tenancies Regulation 2019.
Showing the property to a prospective buyer
A lessor or lessor’s agent can enter a premises to show the premises to a prospective buyer. The lessor or agent can do this only if they have given written notice to the tenant at least 14 days before the property is first made available for showing. They must also make all reasonable efforts to ensure the days and times for showing suit the tenant. The tenant must not unreasonably refuse to agree to days and times for showing, but does not need to agree to more than 2 showings a week. If the lessor or lessor’s agent fails to agree on showing times and days, the lessor or lessor’s agent can show the property up to twice a week if they give the tenant at least 48 hours’ notice of each showing.
Entry must be made at a reasonable time, and unless the tenant agrees, not on a Sunday or public holiday, or between 6pm and 8am. The lessor or agent must not stay any longer than necessary.
The tenant has a right to be at the property when it is shown, or to have a representative there. If a tenant’s property is stolen or damaged during a showing, the tenant can apply to the NSW Civil and Administrative Tribunal (NCAT) for compensation. The tenant must show that the loss or damage was due to the conduct of the lessor or agent, or another authorised person.
The lessor must take reasonable steps to ensure the tenant has quiet enjoyment of the premises. Additionally, the lessor or agent must not interfere with the reasonable peace, comfort or privacy of the tenant using the premises. If the tenant feels the process of showing potential buyers through the premises is infringing their rights, they can issue a breach to the lessor or agent. This is why communication and negotiation are important to minimise inconvenience to all parties, and why an agent should limit inspections to qualified buyers only.
As for the condition of the property during a showing, the property must be kept in a “reasonable state of cleanliness” during the tenancy.
When advertising a property, the lessor or agent can access the property to take photos or video of the inside of the property. They must give the tenant reasonable notice and opportunity to move possessions so they will not be captured by a camera. A lessor or agent must not publish a photo or image that shows a tenant’s possessions, unless there is written consent from the tenant.
The lessor or agent can enter the property once in the 28 days before the marketing of the property or the termination of the tenancy.
If photos or video is published without the tenant’s consent, the tenant can apply to NCAT for an order that the lessor or agent destroy the photo or video, not use the photos or video in advertising, and pay compensation for financial loss suffered as a result of the publishing. An application must be made within 3 months of the publishing.
A lessor or agent must gain a tenant’s consent to place a “for sale” sign on the property. If a sign is installed without consent, the tenant can remove the sign and apply to NCAT for an order to prevent a sign from being installed. This is because installation is a breach of the tenant’s right to peace, comfort and privacy at the property. This rule does not apply if the property is part of a strata scheme, such as a unit in a complex.
A lessor or agent must not conduct or allow an open house at the property without the tenant’s written consent. The tenant does not have to agree to an open-house showing.
Notice to leave
If a tenant is under a periodic agreement (one which recurs automatically and has no specified end date), the lessor or agent can give the tenant a 30-day notice to leave the premises. This can be done only when a contract for sale has been signed and the contract requires the buyer to have “vacant possession” of the property. If the tenant wants to end the agreement, they can serve a no reason notice of 21 days.
If a fixed-term lease is in place, the lease cannot be terminated if the property is sold and continues with the same terms.
If the lessor or agent did not disclose the property was under a contract of sale before the tenant signed a lease on the property, the tenant can apply to NCAT for an order to terminate the lease. The tenant can also seek compensation for any costs related to the termination.
Once the property is sold
The tenant should be given a written notice that states the buyer’s name and address and direct the tenant to make all future rent payments to the buyer.
For advice or representation in any legal matter, please contact Armstrong Legal.