WA Rules for selling a tenanted house?

Discussion in 'Property Management' started by D3xx, 1st Dec, 2020.

Join Australia's most dynamic and respected property investment community
Tags:
  1. D3xx

    D3xx Well-Known Member

    Joined:
    3rd Mar, 2016
    Posts:
    71
    Location:
    Perth
    My IP has tenants with a fixed lease until June 2021. If i was to sell the house, and the buyers wanted it vacant, what are the rules for terminating the lease?
     
    D3xx, 1st Dec, 2020
    #1
  2. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,346
    Location:
    Australia
    Offer tenants money and ask the agent to find them another place.
     
    Trainee, 1st Dec, 2020
    #2
    Antoni0 likes this.
  3. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    14,015
    Location:
    Brisbane
    If you offer an incentive for them to move early, get it in writing.

    We offered a sitting tenant the last four weeks free rent if he kept the place tidy and would move early to allow settlement. He was a lawyer, so we got this all written up and signed by each party.

    He stuck to the plan, and it was a win for both of us (he wanted to move early anyway, but he held the power).
     
    wylie, 1st Dec, 2020
    #3
  4. MyPropertyPro

    MyPropertyPro REBAA Buyer's Agents Sutherland Shire & Surrounds Business Member

    Joined:
    1st Jul, 2015
    Posts:
    1,894
    Location:
    Australia
    You have the sell the house with the lease in place i.e. the tenants are entitled to stay until the end of the lease. It can be terminated by mutual agreement, so you'll likely have to incentivise them to do so.

    - Andrew
     
    MyPropertyPro, 3rd Dec, 2020
    #4
    Tom Rivera likes this.
  5. D3xx

    D3xx Well-Known Member

    Joined:
    3rd Mar, 2016
    Posts:
    71
    Location:
    Perth
    Looking through the WA Rental Tenancies Act (1987), section 63 appears to say that sale of the property is just grounds for terminating a fixed term agreement early. Am i reading it wrong?
    Residential Tenancies Act 1987 06-l0-01 Xml
     
    D3xx, 20th Jan, 2021
    #5
  6. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,850
    Location:
    Perth, WA
    Not wrong, but you must have stopped reading before subsection 4 which says no-can-do during the currency of a fixed term.
     
    thatbum, 20th Jan, 2021
    #6
    Tom Rivera, Michael Mitchell, jared7825 and 1 other person like this.
  7. D3xx

    D3xx Well-Known Member

    Joined:
    3rd Mar, 2016
    Posts:
    71
    Location:
    Perth
    Ah! Thanks for the clarification. That makes more sense.
     
    D3xx, 22nd Jan, 2021
    #7
  8. shelleykins

    shelleykins Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    98
    Location:
    Aust
    I'm curious to know if this has worked for others too, or any other offers that owners have used to encouraged tenants to break fixed lease and vacate property so it can be listed for sale?
     
    shelleykins, 5th Jul, 2021
    #8
  9. Colin Rice

    Colin Rice Mortgage Broker Business Member

    Joined:
    9th Jul, 2015
    Posts:
    3,184
    Location:
    Perth
    The lease contract stays in place until it's renegotiated with the tenants holding the trump card, be prepared for them to stay put as worst-case scenario and strategise accordingly.
     
    Colin Rice, 5th Jul, 2021
    #9
  10. thatbum

    thatbum Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    5,850
    Location:
    Perth, WA
    When I used to work on the state advice line, I remember seeing quite a few cash incentives that the tenants were willing to take.

    One was even $10k or $12k from memory. After the tenants rejected a $5k offer.
     
    thatbum, 5th Jul, 2021
    #10
    shelleykins likes this.
  11. shelleykins

    shelleykins Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    98
    Location:
    Aust
    Wowsers!!! That's a lot of cash :eek:
    I wonder if it would it be considered a tax deduction, similar to if you break fixed interest rates while tenanted???:rolleyes:
     
    shelleykins, 5th Jul, 2021
    #11
    Michael Mitchell likes this.
  12. wylie

    wylie Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    14,015
    Location:
    Brisbane
    Our neighbours (tenants) moved in and told us they had been given $10k to break the lease and move from a house being sold. This is more than ten years ago, and it was a lot of money back then.
     
    wylie, 5th Jul, 2021
    #12