Selling during fixed-term agreement?
Question from Katie updated on 1st January 1970:
DBH AUG 14 MAG
Hi there, I own a rental property which I need to sell due to financial reasons. I have a tenant who has a lease until January next year, can I sell it and transfer the lease to the next owner? Do I have to ask permission from the tenant for this?
Our expert responded:
Where someone purchases a property with a tenancy agreement in place, the new owner inherits the agreement with all the original terms and conditions. The prospective purchaser should be supplied a copy of the agreement. Once the property is sold you must advise the tenant who the new owner is and when they will take over. Your interest in the bond will pass to the new landlord. Both the new and former landlords must fill in and sign a ‘change of landlord’ form (available on www.dbh.govt.nz). You need to file it with us when ownership changes (or shortly after).
If you have a fixed term tenancy until January 2015, generally you can’t give notice to terminate. If you wanted to enter an agreement for sale and purchase now (and offer vacant possession to a new purchaser), you will need to ensure the settlement of the agreement happens after the expiry of the fixed term tenancy.
It is possible for you and the tenant to negotiate an arrangement for earlier termination of the tenancy.
Landlords should be open with their tenants about plans to sell a property from the outset to avoid any misunderstanding or disputes. If you wish to place the rented property on the market for sale, you must advise the tenant in writing immediately.
To show the property to prospective purchasers or a registered valuer who is engaged in the preparation of a report on the premises, you will need the prior consent of the tenants to enter the property. The tenants cannot unreasonably refuse consent but may attach reasonable conditions. The best approach is to talk it through with your tenant.
If a landlord wants to include open homes or an on-site auction in their sales plan, they should discuss this with the tenant first and get the tenant’s consent for specific dates and times. Tenants can insist the property be shown by appointment only.