Selling a Tenanted Property (NT)

In the Northern Territory, a landlord is legally entitled to sell a tenanted property. A tenant cannot prevent the sale or refuse to allow inspections, but they do continue to have a right to live in the property until their lease agreement expires. This right continues even after ownership of the property changes. In addition, the landlord can only market and sell the property in a way that does not unreasonably disturb the tenant’s privacy and quiet enjoyment of their property.

Selling a vacated property

A property owner often prefers to sell a vacant property. Having a vacant property allows the landlord to refresh and stage the home to secure a higher sale price. Moreover, a buyer who intends to occupy the home often prefers to purchase a vacant property, and may not consider a property with a lease in place. If a landlord wishes to have the rental property vacated for sale, they must still abide by the terms of the lease. This means that a tenant who is on a periodic lease is entitled to 42 days written notice to vacate the property. In contrast, tenants on a fixed-term lease cannot be forced to vacate before the end of the fixed term (unless they breach the terms of the lease). Even when the lease has expired, the property owner must still provide at least 14 days written notice requiring the tenant to vacate. It is sometimes possible for a landlord to negotiate a mutually acceptable early end to a fixed lease, or for a periodic tenant to vacate before the full notice period. For instance, a landlord can offer the tenants incentives to try and persuade them to leave early.

Selling a tenanted property

If the property is tenanted at the time of sale, it is described as having a “sitting tenant”.  Under the Residential Tenancies Act 1999, a landlord who wishes to sell a tenanted property must:

• inform the tenant that the property will be put on the market;
• provide the tenant with at least 24 hours written or oral notice for inspections;
• only allow inspections between 7 am and 9 pm;
• not interfere with the tenant’s reasonable peace and privacy; and
• only allow a reasonable number of inspections.

For investors, having a sitting tenant may even be an enticement to purchase, as this means that the new owner receives rental income from the first day of ownership.

Property inspections

When a property owner wants to sell a property, inspections are usually necessary for prospective buyers to get a feel for the property. For properties with a sitting tenant, this can involve considerable inconvenience for those living in the home. In the Northern Territory, a tenant must be present during sale inspections (unless they unreasonably refuse to be present, fail to appear, or waive their right to be present in writing). A tenant may find that their quiet enjoyment of the property is disturbed multiple evenings in a week and on the weekend for several weeks while the property is on the market. If the property does not sell quickly, this process may continue for many months, all for no benefit to the tenant.

However, despite the potential inconvenience, a tenant cannot unreasonably impede a lawful entry to sell a property. When a tenant is obstructing the sale of a property, the landlord can take the matter to the Northern Territory Civil and Administrative Tribunal (NTCAT). NTCAT can order the tenant to let the landlord enter the rental premises using reasonable means. The landlord is not civilly or criminally liable for any act done in good faith to enter the property in accordance with an NTCAT order.

Cooperation between tenant and landlord

Whilst a landlord has certain legal rights to sell a property, it is a good practice to limit the inconvenience to their tenants. For instance, it may be wise to offer the tenant first refusal to buy the property off the market. Even if the tenant is not willing or able to buy, it is still important for the landlord to consider the tenant as a stakeholder in the sale. This should involve open and friendly communication about the progress of the sale so that the tenant is not kept in the dark.

The landlord can also ensure that inspections are conducted in a way that is sensitive to the tenant. For instance, scheduling inspections at dinner time may be permitted within the law but is very disruptive to family life. If the tenant is a shift worker, inspections during the daytime may disrupt their sleep and significantly impact their well-being. If the tenant has young children, inspections during the morning rush to school may be particularly burdensome.

A landlord may consider that it is unnecessary to consider the preferences of tenants as long as inspections are conducted within legal parameters. However, as the sale price of the property can be influenced by the property’s presentation, a cooperative tenant can be an important element in achieving the best price for the property and the quickest sale. While a tenant must keep the property in a reasonable state of cleanliness, presenting a property for sale can maximise the appeal of the home. Open communication can help to find solutions that work for both parties, such as having a cleaner come in before staging photos and inspections.

Go To Court Lawyers can help if you need legal advice or representation on a tenancy matter, application to NTCAT or any other legal issue. Please contact our civil law team on 1300 636 846 for assistance.