18 May 2023
It often happens that a property that you are renting may be sold and the next steps can sometimes be unclear. This article will cover the necessary steps to take as a landlord and as a tenant should you find yourself in this situation.
Tenant
If you are renting a property and the property is sold, there is no need to panic as a tenant - your lease agreement will lay out the way forward. If your lease agreement states that a landlord may give notice to a tenant to vacate if the property is sold, there will always be a timeframe stipulated in writing on the lease agreement. The standard timeframe, from our experience, would be two to three months.
If the lease agreement does not allow for any provision for cancellation if the property is sold, the lease will continue based on the same terms and conditions. The lease agreement will transfer to the new owner of the property once the sale has been registered, therefore there is no need for a new lease agreement to be drawn up.
Tenant and Landlord
Should the deposit be held by the landlord, this amount including interest will need to be transferred to the new owner of the property once the sale has been registered as the responsibility of refunding the tenant their deposit will now fall upon the new owner as the landlord, once the lease agreement has expired / terminated. If the deposit is being held by an agency, as representation of the landlord, the agency will make necessary adjustments on their management systems to ensure for a smooth transition.
Landlord
Is it important to note that when selling a property, that it is specifically stipulated, in writing, in the sales agreement that there is a tenant residing in the property and to provide a copy of the current lease agreement to the purchaser. In this way, the purchaser is fully aware of their rights once they take ownership of the property. Meaning, that the new owner will be able to either give the tenant notice to vacate the property in line with the timeframes stipulated in the lease agreement (if any), or, that the current tenant will remain in the property until the lease agreement has expired.
As a landlord it is important to ensure that all relevant lease documentation is in place and handed over on registration of the property, with specific reference to the ingoing inspection report and recordal of any defects during the tenancy.
The new owner of the property will be responsible to do an outgoing inspection with the tenant, which will need to be conducted at the end of the lease period. The ingoing and outgoing inspection reports will then be compared to assess damages (if any), apart from “Fair wear and Tear”, that the tenant may be liable to repair.
