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Termination Trade-off: 2 Methods of termination when rental is being sold

Under Section 51 of the RTA, there are several reasons why you can terminate a periodic tenancy.

However, under the new laws there are two ways you can terminate a periodic tenancy if the property is to be put on the market.

This remains an area of huge confusion for the property management industry. In fact, we receive more consultancy calls on this issue than any other.

So, let’s break down what both of these subsections mean and explain how you can use these notices, which can be found in Total Tenancy here, correctly.

Method 1: Terminate to list

Legal Authority: Section 51 (2) (a)

A landlord may terminate a periodic tenancy by giving at least 90 days’ notice if—

(a) the premises are to be put on the market by the owner within 90 days after the termination date for the purposes of sale or other disposition.

Under this subsection, you should issue the 90 day notice to terminate the tenancy first, then, after the tenancy has terminated, (and presumably the tenant has vacated), list the property for sale within the next 90 days.  You should advise owners to use this notice if they want vacant possession through the sale process.

Example

The owner advises you on May 1st that he wants vacant possession of the property before they sell the property. You then proceed to give notice to the tenant on the same day, then 90 days later on July 30th, the tenant vacates the tenancy. On August 1st, the owner can then put the property on the market for sale.

The law takes no part in what actually happens after that. We presume that the law anticipated that owners might need 90 days or thereabouts to renovate the dwelling before selling it or perhaps they would like to stage the property before putting it on the market.

If there was no gap between the end of the tenancy and the listing for sale then the vendors would not lawfully have time to complete any renovation work at all, before having to list it for sale. 

Because there is no tenant in possession, no showing agreement is necessary and dates for settlement are not constrained in any way.  

So how can you give notice and list the property for sale with the tenant remaining in the rental property? Watch the full training Snippet on the Search Page in Total Tenancy.  

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