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NSW Can I Terminate Lease Due to the Sale of Premises?

Discussion in 'Property Law Forum' started by Elona, 5 November 2015.

  1. Elona

    Elona Active Member

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    Hello,

    I have a situation where I need to urgently move out of the rented premises. A month into my lease agreement I have received a letter from my property manager informing me that the premises have been sold (name of the new owner was provided) but the management of the property has been retained.

    The intention to sell was not disclosed to me at the beginning of the tenancy agreement. Do I have grounds to terminate the agreement under Property Law due to the property being sold without being penalised with the breaking lease fee?

    Thanks so much in advance for a guidance in this matter.
     
  2. JS79

    JS79 Well-Known Member

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    According to the Residential Tenancy Act, you may give a termination date to the landlord without compensating them if they did not disclose the proposed sale prior to you signing the lease.

    However, if they can prove that the agent did not know that the landlord was looking at selling the house then they may be able to use that as a defence.

    I suggest you talk to a property lawyer. See Get Connected with the Right Lawyer for You
    to be connected to a local lawyer specialising in property law.
     
  3. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Hi Elona,
    I think the above is correct, with regard to your right to terminate the lease without compensation payable to the LL (refer s100 RTA (NSW) 2010 below).

    Given that no notice of intention to sell was provided before you signed the Tenancy Agreement...

    You would treat the Notice that a sale has now occurred as Notice of Intention to sell, and Notice of the actual sale at the same time.

    I cannot see how knowledge or lack of knowledge by the agent at the time you entered the Lease would make any difference, as the agent is acting on behalf of the LL...

    It it is not your problem, if the LL does not tell the agent about the sale.

    RESIDENTIAL TENANCIES ACT (NSW) 2010 - SECT 100
    Early termination without compensation to landlord
    100 Early termination without compensation to landlord
    (1) A tenant may give a termination notice for a fixed term agreement on any of the following grounds:
    (a) that the tenant has been offered, and accepted, accommodation in social housing premises,
    (b) that the tenant has accepted a place in an aged care facility or requires care in such a facility,
    (c) that the landlord has notified the tenant of the landlord’s intention to sell the residential premises, unless the landlord disclosed the proposed sale of the premises before entering into the residential tenancy agreement as required by section 26,
    ...
    (2) The termination notice must specify a termination date that is not earlier than 14 days after the day on which the notice is given.
    (3) The termination notice may specify a termination date that is before the end of the fixed term of the residential tenancy agreement.
    (4) The tenant is not liable to pay any compensation or other additional amount for the early termination of the agreement.

    Kind regards
     
  4. Elona

    Elona Active Member

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    Thank you very much for reply. The property was brand new and rented out to me by the property developer Meriton Property Services which was also my landlord/agent at the time. I am pretty sure that they intention was to sell the property . I have only find out about the sell via a formal letter once the property has been sold one month into my lease. When I question it my property manager in defence said to me that the majority of the apartments in my building were sold prior to tenants moving into the properties and they have only just settled now and my apartment was not sold after I have moved in. Are you able to comment on this further?
     
  5. James D. Ford - Solicitor

    James D. Ford - Solicitor Well-Known Member

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    Hi Elona,

    I recommend you double check the paperwork you were provided with at the time you signed the Lease... and confirm that you were not provided with any disclosure regarding any proposed sale.

    This is a tricky situation... as notice is required before your enter the Lease of a "proposed" sale

    What does "proposed sale" mean?

    If the sale had already occurred before you signed the Lease, and moved in.. as in the Contract of Sale has already been signed... is this still a "proposed" sale?

    I would need to look further into the matter to determine any judicial interpretation regarding the words "proposed sale".. before I can comment further...

    If the settlement was 1 month after you moved in... it is possible the Contract was signed before your entered the Lease.. certainly, this is what your LL/agent has advised you...

    Please ask them to provide the date of the Contract of Sale...

    It appears as if the agent has admitted they knew about the sale or proposed sale of the property, at the time you entered the Lease.

    I need to revise my above statement, as it is incorrect (JS79 was right in their response above):

    "It it is not your problem, if the LL does not tell the agent about the sale."

    s26(3) below, states:

    "(3) Subsection (2) does not apply to a landlord’s agent unless the agent is aware of the matters required to be disclosed."

    If the LL and the agent are the same legal entity.. which might be the case in your situation, then they would be barred from attempting to use the above exception.
    =====================================================
    RESIDENTIAL TENANCIES ACT 2010 - SECT 26
    Disclosure of information to tenants generally
    26 Disclosure of information to tenants generally
    (1) A landlord or landlord’s agent must not induce a tenant to enter into a residential tenancy agreementby any statement, representation or promise that the landlord or agent knows to be false, misleading or deceptive or by knowingly concealing a material fact of a kind prescribed by the regulations.

    (2) Disclosure of sale, mortgagee actions
    A landlord or landlord’s agent must disclose the following to the tenant before the tenant enters into the residential tenancy agreement:
    (a) any proposal to sell the residential premises, if the landlord has prepared a contract for sale of the residential premises,
    (b) that a mortgagee is taking action for possession of the residential premises, if the mortgagee has commenced proceedings in a court to enforce a mortgage over the premises.

    (3) Subsection (2) does not apply to a landlord’s agent unless the agent is aware of the matters required to be disclosed.

    (4) Information statement to be given A landlord or landlord’s agent must give a tenant an information statement in the approved form before the tenant enters into the residential tenancy agreement.

    Maximum penalty: 20 penalty units.
     
  6. Elona

    Elona Active Member

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    James - thank you.
     
  7. Elona

    Elona Active Member

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    BTW. I have asked for the Contaract of Sale date and was provided with the date of sale which was ab 2 months before I signed the lease (Of the plan sale) ..
     
  8. JS79

    JS79 Well-Known Member

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    You will then be able to terminate the lease without compensation to the landlord for failure to mention the sale.
     
  9. Elona

    Elona Active Member

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    Apparently the terms & conditions of the contract of sale do not affect my tenancy and if I wish to terminate the tenancy it would not be without penalty, does this sounds right to you?
     
  10. LeaseBreaking

    LeaseBreaking Member

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    Good evening (apologies for bumping this thread, but it relates to a similar situation I am currently going through.

    The difference is that my landlord is claiming that in order to break a lease without penalty, I must give notice within 14 days of settlement. They have not been able show me where in the Act it says this, and to me, the wording of S100 is crystal clear and silent on any time frame. Furthermore, this precedent seems to corroborate my initial suspicion despite the fact the landlord and Fair Trading both tell me I have no claim (without highlighting specific legislation to back this up): Szabo v Graham, Parslo (Tenancy) [2013] NSWCTTT 481 (25 September 2013)

    So my question to you is, to your knowledge, must notice to break a lease be given within 14 days of SETTLEMENT in order to avoid penalty? Or am I ok to simply provide 14 days at any time after the sale and settlement?

    Many thanks.

    There is some further background on my situation here if you are interested, but completely understand if you're not or don't have time: Has anyone successfully broken a lease in NSW without incurring a financial penalty? : sydney
     

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