Mortgagee sale's tenancy issues

Question from Glenn updated on 17th May 2013:

We have puchased a property through a mortgagee sale. The existing tenant is paying the former landlord, therefore he is a squatter. The former landlord has told the tenant that she is still the owner of the property. Can I apply for a possession order? It can take several weeks to get a Tenancy Tribunal hearing. Is there a quicker way?

Our expert Alan Bruce responded:

Under the Residential Tenancies Act 1986 (the Act), where a landlords’ interest in the premises passes to any other person (e.g. when a property sells), the landlord is required to provide the tenant with written notice of the disposition, including the purchasers’ details. Tenants have an obligation to continue paying rent to their landlord until such time as that notice is received by the tenant. However, where a mortgagee or other person (purchaser) becomes entitled to possession of the premises that has an existing tenancy agreement in place, the purchaser takes on the same rights that the landlord had under the tenancy agreement (e.g. the purchaser inherits the existing tenancy). In this situation, the purchaser is required to provide the tenant with their details in writing, including their full name and contact address information, their address for service details (including a physical address at which notices and other documents relating to the tenancy will be accepted by or on behalf of the other person), and provide account details where rent should be paid. It would also be prudent to provide the tenant with proof of ownership. Once the purchaser has become entitled to possession of the premises and the tenant has received notification from them providing their details, the tenant is required to pay rent to the new landlord. If the tenant is in arrears, the landlord may give the tenant 14 days’ written notice to remedy the breach. As the notice must be in writing, service time must be allowed for, and a copy of the notice retained. A template for a 14 days’ notice letter along with information about service times can be found on the Ministry of Business, Innovation, and Employment - Building and Housing Group’s (the Ministry’s) website (www.dbh.govt.nz). If the tenant does not comply with the notice, or if the tenant is at least 21 days’ in arrears, the landlord may seek the appropriate remedy through the Tenancy Tribunal. If the tenant has paid rent to their previous landlord after the date the purchaser becomes entitled to possession, but prior to being provided with details of the purchaser / new landlord, it is recommended that the parties discuss the matter in the first instance to try and reach an agreement. If an agreement is unable to be reached as to who the landlord is, or who rent should be paid to, either party may apply to the Tenancy Tribunal to have the matter determined. In any case, the quickest option is often for the landlord and tenant(s) to reach a mutual agreement (recording any agreement in writing). Where this is not possible, either party may apply to the Tenancy Tribunal for a resolution. If a bond is held by the Ministry, a Change of Landlord form should be completed and forwarded to the Ministry to ensure the details on the bond record are updated. A Change of Landlord form can be downloaded at: http://www.dbh.govt.nz/UserFiles/File/Publications/Tenancy/pdf/change-of-landlord-agent-form.pdf To discuss your situation further, or for further information regarding landlord and tenant obligations and mortgagee sales, you can visit the Ministry of Business, Innovation and Employment – Building and Housing Group’s website (www.dbh.govt.nz), or call 0800 TENANCY (0800 836 262).

The Ministry of Business, Innovation and Employment provides information and guidance on building law and compliance, services including weathertight homes, and advice for tenants and landlords.

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