The tenancies section on page 3 of the REIQ contract requires the person preparing the contract to insert:
(a) Details of the tenancy to which the property is sold subject, or
(b) “Nil” if there is no tenancy.
This sounds simple enough but we see instances where errors are made. These include:
1. Not inserting any tenancy details when in fact a tenancy exists and the term of the tenancy is to continue beyond settlement.
2. Not inserting tenancy details where a tenancy exists, the term of the tenancy is to continue beyond settlement but it is presumed that the tenant will move out before settlement but the tenant has either not been given notice to move out or refuses to move out.
In either of these instances, the seller will be in breach of the contract if the buyer is not given vacant possession at settlement. This stems from standard condition 5.5 which states:
On the Settlement Date, in exchange for the Balance Purchase Price, the Seller must give the Buyer vacant possession of the Land and the Improvements except for the Tenancies.
Other tenancy questions that need to be addressed before a contract is entered into include:
(i) Is there a signed tenancy agreement and is there a copy to give to the buyer?
(ii) Has the tenant paid a bond and was it lodged with the Residential Tenancies Authority?
(iii) Has an entry condition report been obtained and signed by the landlord and the tenant?
It is important to consider any tenancies that affect the property because the ramifications for not doing so can be severe.
We are available to meet with you at any of our local offices (Brisbane, Gold Coast, Beenleigh, Cleveland and Jimboomba) or by telephone or video-conference.
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This update is for your information and interest only. It is not intended to be comprehensive, and it does not constitute and must not be relied on as legal advice. You must seek specific advice tailored to your circumstances.