What happens if there is a tenant living in the property that I’m purchasing?

If you know that there is a tenant living in the property, then you should check the contract to ensure that you have been provided with a copy of the tenancy agreement. Depending on what you are intending to do with the property, you will need to ask different questions of the tenancy.

Purchasing to live in

If you are purchasing for the purpose of moving in, then you’ll need to work out what the lease term is and when it is going to end. A tenancy will not automatically come to an end at the lease term, notice will need to be served on the tenant for them to vacate. If you are looking to move in as soon as settlement has taken place, then you will need to negotiate a term in the contract that requires the seller to issue the notice to vacate on the tenant for you. Your conveyancing lawyer can help you draft the required special condition into the contract.

Purchasing as an investment property

If you are purchasing for the purpose of investment, then you’ll need to discuss with the property manager to understand the financial position of the property. You could look into the length of the tenancy and negotiate for the seller to renew the lease agreement for you prior to signing to secure your mortgage repayment for the first year. You could look into the intentions of the tenant to see if they have an intention to reside in the property long term or if they are about to move out.

If the tenant is looking to terminate the lease prior to settlement, then you may negotiate with the seller to allow for open for inspection clauses in the contract, so that you can bring forward the timing in your search for a suitable tenant. You cannot sign a lease with the tenant until you become the owner of the property, or you will have to involve the seller in the lease signing on your behalf. Speak with your conveyancing lawyer to understand your unique circumstances so that you can receive appropriate advice in relation to same.