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Selling a leased property: What Perth sellers need to know

Apr 9, 2024

Navigating the sale of a leased property can be complex, with various factors to consider to ensure a smooth transition for all parties involved. Whether you’re an investor looking to diversify or you are simply moving on from a rental property, understanding the intricacies of selling a property under lease is crucial.

This article explores the key points sellers should be aware of, focusing on the distinction between fixed-term leases and periodic leases, and the implications for both.

Fixed-term leases: Security & continuity

 A fixed-term lease is a rental agreement set for a specific period, usually ranging from a few months to several years. When selling a property subject to a fixed-term lease, the lease remains in place under the new owner, and the tenants retain the right to live in the property until the lease expires. This continuity can be attractive to investors, offering immediate rental income and a tenant already in place.

Key considerations for fixed-term leases:

  • Transfer of responsibility: The new property owner assumes the role of the landlord, taking on all responsibilities outlined in the existing lease agreement.
  • Attracting investors: Properties with reliable tenants and ongoing leases can be particularly appealing to investors looking for stable returns.
  • Communication is key: It’s important to inform tenants about the change in ownership, ensuring a seamless transition and maintaining a positive landlord-tenant relationship.

Periodic leases: Flexibility with notice

Unlike fixed-term leases, periodic leases operate on a rolling basis, typically month-to-month, after the original lease term expires. Selling a property with a periodic lease offers more flexibility, as landlords can give tenants notice to vacate according to local laws, usually providing a notice period of about 30 to 60 days. This option is often pursued if the seller or buyer desires the property to be vacant for sale or personal use.

Key considerations for periodic leases:

  • Notice requirements: Ensure compliance with local regulations regarding notice periods and tenant rights.
  • Selling with tenancy: If selling with the tenancy in place, this should be communicated to prospective buyers.
  • Vacant possession: If the property is to be sold without tenants, this must be stipulated in the sale contract, and appropriate notice given to tenants.

Stipulating vacant possession

Whether a property is sold with tenants in place or is currently vacant, it should be clearly outlined in the contract of sale. Vacant possession means the property will be delivered to the buyer empty, without tenants. This is particularly relevant for buyers purchasing a home for personal use or investors who wish to select their tenants.

Key points to remember:

  • Clarity in contracts: The sale agreement must specify if the property will be delivered with tenants or as vacant possession.
  • Obligations: Sellers must adhere to lease agreements and local laws, respecting tenant rights throughout the sale process.
  • Professional advice: Consulting with a conveyancing professional can help navigate the complexities of selling a leased property, ensuring compliance, and protecting all parties’ interests.

 Essence Conveyancing is here to take you through the process

At Essence Conveyancing, we understand the intricacies of selling leased properties. Our team is here to guide you through every step, ensuring a smooth and compliant transaction. Whether you’re dealing with a fixed-term or periodic lease, we provide the expertise and support you need.

Selling a leased property requires careful consideration and planning. By understanding the differences between lease types and ensuring clear communication, and compliance, sellers can navigate these waters successfully.

For personalised assistance, reach out to Essence Conveyancing today.


Disclaimer: Please note, the contents of this article do not constitute conveyancing advice, are not intended to be a substitute for conveyancing advice and should not be relied upon as such. You should seek conveyancing advice or other professional advice in relation to any particular matters you or your organisation may have. To find out more, please contact us.