Tenancy agreement and change in ownership

Discussion in 'Property Management' started by Ben20, 21st May, 2021.

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  1. Ben20

    Ben20 Well-Known Member

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    Hi all,

    I was wondering what happens if one buys a house with existing tenants. Since the tenants have made agreement with previous owner, do new tenancy agreement is required or existing one remains valid? Likewise what happens to property management agreement? I am trying to buy an IP, and these questions keep coming in my mind.
     
  2. Ronen

    Ronen Well-Known Member

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    Pretty simple: everything stays the same with the tenants (start date, end date, rent price etc)
    You don't have to stay with the same PM

    When I took over a tenanted property, I drew new contracts, with different (shorter) end date + void and null contract and the tenants signed it - basically got me out of their longer (and messier) contract.

    You can do that if the tenants are happy to.
    Served me well in this instance as I can now get rid of them at the end of my contract rather then have them much longer (pretty bad tenants, deserve to be kicked out).
    Bare in mind, you never vetted those tenants, they might not be the best of the bunch....
     
  3. Ben20

    Ben20 Well-Known Member

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    Thanks @Ronen for answering.

    How do I change PM? Would there be any termination pay outs? How complicated the process would be?
     
  4. Ronen

    Ronen Well-Known Member

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    I guess you'll have to check with the selling agent. They might know.
    I actually have no idea, but it reasonable to believe the current PM has no contract with you, so they are not automatically continue.
    Changing PM is pretty easy last time I did that - you find a new one and they will contract the old one for a handover.
    Mine didn't have any termination fees.
     
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  5. Hayley Cannon

    Hayley Cannon Well-Known Member

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    You will need to select your own PM whether that be the current managing agent or not.

    Once you select your new PM they will handle the changeover for you, all you need to so is sign their required documentation
     
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  6. Mel Morgan

    Mel Morgan Sydney Property Manager Business Member

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    The tenancy agreement remains with a property whereas the management agreement is between the previous owners and the agency.

    Hence the tenants can remain on their existing agreement terms (although in NSW there are options if they're no longer on a fixed lease), but as the new owner you will need to either sign a new agreement with the existing agent, choose a new agent or choose to go with no agent at all.
     
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  7. Ben20

    Ben20 Well-Known Member

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  8. Phoenix Pete

    Phoenix Pete Well-Known Member

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    Don't forget to get the managing agent (new or existing if continuing management) or your solicitor to send a Letter of Attornment to the tenant if the existing lease is in place at the time of property settlement.
     
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  9. Tom Rivera

    Tom Rivera Property Manager Business Member

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    Agent is required to send the tenants a letter explaining that they've taken over. There's actually a list of legal requirements as to what's provided buried somewhere in the act, but you'll find 99% of agents have a letter template that ticks all the boxes automatically. You'll only need to change the agreement on renewal, no need to redraft an existing agreement upon sale.
     
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  10. Cynthia Chow

    Cynthia Chow Member

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    The landlord can choose a different PM by just issuing an authorisation. The new PM will handle the transfer process including informing the tenants, change of bank account for rent payment, pick up keys, change the bond agency names etc.
     
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