Usually, once settlement takes place, a purchaser is entitled to vacant possession of the property. However, if the Contract was signed “subject to lease”, the purchaser will become the Landlord and is bound by the terms of the existing lease for the property. The purchaser is entitled to receive rent profits from the day of settlement.
A copy of the lease should be provided in the Vendor’s Statement before the contract of sale was signed. The lease will include details such as the term and any future options to renew the lease, rental payable and bond or security deposit. It is important that as a purchaser of a property with an existing tenant that you understand the terms of the lease. At settlement the security deposit should be adjusted or a new bank guarantee given to the new landlord.
As the new landlord, you are entitled to appoint a managing agent of your choice. You are not required to remain with the current managing agent.
If you are purchasing a property subject to lease, you should seek the appropriate advice from our office. We can assist with both the conveyancing and leasing aspects of the transaction.