(updated on Monday, August 15th 2016)
We are just in the final stages of purchasing a property. We are buying the property tenanted.
With four individual units each on a periodic tenancy agreement, I was wondering how the transfer process works?
When do I let them know our bank account details: does this happen before settlement? I'm assuming this would all take place before settlement? Is it something we do or our solicitors?
Along with the landlord transfer form, do they need to fill out another periodic agreement with ourselves as the new landlords?
If I want to put the rent up as a new landlord, is it the standard 60 days written notice and is this done all tenancy transfer or better left to a later date?
Our Experts Answer:
Under the Residential Tenancies Act, when a rented premises is sold, the landlord (current or new) must tell the tenant who the new owner is and when they’ll take over as owner or landlord of the property.
As a part of the sale and purchase process, the current landlord (the vendor) could be asked to provide the new owner with a copy of the tenancy agreement. Once a new owner takes possession of the property, they must tell the tenant:
• their name, contact details and an address for service
• how the tenant is to pay the rent (for example, the new bank account number) and the date that the rent is to be paid to the new owner/landlord.
The tenant also has the right to request proof of ownership to ensure they are paying the rent to the correct party.
When the property is sold, the original landlord’s interest in the bond will pass to the new landlord. This means that the original landlord can no longer claim any bond, unless they do so before the date of settlement (or date of possession, if this is earlier).
It is recommended that independent advice is sought to ensure any claim to the bond will not impact on the sale agreement. If a bond is held by the Ministry of Business, Innovation & Employment, both the original and new landlords must fill in a “change of landlord/agent” form. Normally, when rented premises are sold, the purchaser of the premises ‘inherits’ the former tenancy agreement, with the same terms and conditions that were contained in that agreement.
However, there is nothing in the Act that precludes the new landlord and the tenant negotiating a new agreement, with terms and conditions that are agreed between both parties.
Lastly, a landlord has the right to increase the rent for a periodic tenancy agreement as you have stated, either after the first 180 days of the tenancy, or provided that the increase is not within 180 days of the last increase. You should check with the vendor of the premises when, or if, they last increased the rent.
For further information regarding landlord and tenant rights and responsibilities, including the forms and templates you may require to complete the bond transfer or rent increase process, you can visit our website at www.tenancy.govt.nz.
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