Buying a Tenanted Property – Can I request vacant possession?

On the front page of a Contract of Sale the vendor will indicate if the property is being sold with “vacant possession” or “subject to tenancy”.  If neither box is ticked, vacant possession is the default selection.

If a contract is marked vacant possession, the property needs to be vacant at settlement and you are not required to settle if it is not vacant.

If the property is being sold ‘subject to tenancy’ the current Residential Tenancy Agreement (RTA) and any amendments to that agreement should be attached to the contract.

The RTA will show the term of the tenancy, that is, a fixed start and end date for the tenant’s occupation. If you are buying sometime between the start and end dates, then the tenancy is a ‘current tenancy’, and you are buying the property subject to that tenancy.  In this circumstance, neither you nor the vendor can require the tenant to vacate before the end of the fixed term.

When you are the owner, you can give a minimum of 30 days’ notice to the tenant to end the tenancy on the end date.  

If the RTA shows that the end date on the lease has passed, the tenancy is an expired tenancy, often called a periodic tenancy.  In this circumstance the tenant is continuing to occupy the property under the same terms as the now expired lease.

The tenant under an expired lease is entitled to stay until they are given the appropriate notice to vacate; currently 90 days.

If you are buying a property with an expired tenancy, and you would like the property to be vacant, the contract of sale should be amended before exchange to show vacant possession.  If the contract is marked vacant possession the vendor can give just 30 days’ notice to the tenant to vacate.  

It should be noted that when a property is being sold, a tenant can terminate a fixed term agreement with just 14 days’ notice unless it was disclosed to the tenant before entering into the RTA that the property was to be sold.  If the tenancy was aperiodic tenancy, and the property is being sold, the tenant can vacate at any time.  In other words, even though the contract has been marked ‘subject to tenancy’ the vendor does not guarantee that the tenant will still be in occupation at settlement.

Frequently Asked Questions

What is the difference between "vacant possession" and "subject to tenancy"?

Look at the front page of the Contract of Sale, where the vendor ticks one box or the other. Leaving both blank defaults the sale to vacant possession. Where vacant possession applies, the property must be empty when you settle, and you are within your rights to refuse settlement if anyone is still living there. Where the sale is subject to tenancy, the existing Residential Tenancy Agreement and any amendments to it should be attached to the contract. That document is worth reading closely, because its dates dictate how much control you will have once the property is yours.

Can I ask the tenant to leave after I buy?

That depends on whether the lease has run its course. If you purchase partway between the start and end dates shown on the RTA, you are buying into a current tenancy, and neither you nor the vendor can force the tenant out before the fixed term expires. As the new owner you can give a minimum of 30 days' notice to end the tenancy on that end date. Where the end date has already passed, the tenancy runs on periodically under the same terms, and the tenant can remain until served the required notice, presently 90 days.

How do I make sure the property is empty at settlement?

If you are buying into an expired tenancy and want the place vacant, have the contract amended to vacant possession before exchange, not after. Once it is marked that way, the vendor only needs to give the tenant 30 days' notice rather than 90. Be aware the reverse situation carries no guarantee either. A tenant on a fixed term can end the agreement on just 14 days' notice when a property is being sold, unless the sale was disclosed to them before they signed. On a periodic tenancy, they can leave whenever they choose.

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This information is intended to be general in nature and does not take into account your particular situation, objectives or needs. Before acting on any information, you should seek professional legal advice.