Selling a Tenanted Property in New Zealand
When a landlord decides to sell a property that is currently tenanted, specific rules, rights, and obligations under the Residential Tenancies Act 1986 (RTA 1986) apply. The process involves balancing the landlord's right to sell with the tenant's right to quiet enjoyment of their home. A tenancy agreement is a legally binding contract between a landlord and a tenant that sets out the terms and conditions of a tenancy [Source: Residential Tenancies Act 1986, s 4].
Landlord's Right to Sell
Landlords in New Zealand generally have the right to sell their property at any time. The RTA 1986 does not prevent a landlord from selling a tenanted property.
Tenant's Rights During the Sale Process
Tenants have specific rights that must be respected by the landlord during the sale process.
Entry for Viewings and Valuations
Landlords, or their agents, wishing to enter the premises to show it to prospective purchasers or to allow for valuations must provide the tenant with at least 48 hours' written notice of entry [Source: Residential Tenancies Act 1986, s 48(1)(d)]. Entry must occur at a reasonable time [Source: Residential Tenancies Act 1986, s 48(1)]. Tenants must not unreasonably withhold their consent to the landlord entering the premises at reasonable times for a reasonable purpose, which includes showing the property to prospective purchasers [Source: Residential Tenancies Act 1986, s 48(2)].
Advertising the Property
The landlord is generally permitted to advertise the property for sale, which may involve placing a 'for sale' sign on the property or taking photographs of the interior and exterior. However, any photographs or advertising material must respect the tenant's privacy and not unduly interfere with their occupancy.
Quiet Enjoyment and Privacy
The landlord has a duty not to interfere with the tenant's quiet enjoyment of the premises [Source: Residential Tenancies Act 1986, s 38(2)]. Quiet enjoyment refers to the tenant's right to use and enjoy the property without unreasonable disturbance from the landlord. Excessive or poorly managed viewings, or intrusive advertising, could potentially breach this duty.
Impact of Sale on Tenancy Agreement
The type of tenancy agreement in place determines what happens to the tenancy when the property is sold.
Fixed-Term Tenancies
A fixed-term tenancy is a tenancy agreement for a specific period of time [Source: Residential Tenancies Act 1986, s 66]. When a property on a fixed-term tenancy is sold, the tenancy generally continues until its expiry date [Source: Residential Tenancies Act 1986, s 60]. The new owner becomes the new landlord and is bound by all the terms and conditions of the existing fixed-term tenancy agreement [Source: Residential Tenancies Act 1986, s 60]. The previous landlord's obligations transfer to the new landlord [Source: Residential Tenancies Act 1986, s 60]. Fixed-term tenancies cannot usually be terminated early by the landlord due to the sale, unless there is mutual agreement with the tenant or an order from the Tenancy Tribunal in specific hardship cases [Source: Residential Tenancies Act 1986, s 66].
Periodic Tenancies
A periodic tenancy is a tenancy agreement that continues indefinitely until either the landlord or tenant gives notice to end it [Source: Residential Tenancies Act 1986, s 60A]. If a property on a periodic tenancy is sold, the tenancy also generally continues. The new owner becomes the new landlord and takes over the existing periodic tenancy [Source: Residential Tenancies Act 1986, s 60].
Termination of Tenancy Due to Sale
Landlord's Notice Requirements (Periodic Tenancies)
For periodic tenancies, a landlord can terminate the tenancy if the property has been sold and the new owner requires vacant possession. In such a case, the landlord must give the tenant at least 90 days' written notice [Source: Residential Tenancies Act 1986, s 50A(1)(c)]. This notice can only be given if the landlord has entered into an unconditional agreement for the sale of the premises with vacant possession [Source: Residential Tenancies Act 1986, s 50A(1)(c)]. The notice period begins the day after the notice is given to the tenant [Source: Residential Tenancies Act 1986, s 66D].
Tenant's Right to End Periodic Tenancy Early
If a landlord gives notice to terminate a periodic tenancy on the grounds of sale with vacant possession under section 50A of the RTA 1986, the tenant has the right to give 21 days' written notice to end the tenancy earlier [Source: Residential Tenancies Act 1986, s 51(2)(b)]. This allows the tenant flexibility to move out once they find a new place, rather than waiting for the full 90-day period.
Transfer of Bond and Tenancy Information
When a tenanted property is sold, the bond held by Tenancy Services is transferred to the new landlord. The former landlord must notify the Chief Executive of the Ministry of Business, Innovation and Employment (who administers Tenancy Services) of the change of ownership of the premises [Source: Residential Tenancies Act 1986, s 18(1)(e)]. The new landlord is then responsible for the bond. The former landlord must also provide the new landlord with a copy of the tenancy agreement and any other relevant documents relating to the tenancy [Source: Residential Tenancies Act 1986, s 60(3)].
When to Seek Independent Legal Advice
Anyone involved in the sale of a tenanted property who is unsure about their rights or obligations, or who is experiencing a dispute, should seek independent legal advice. The Tenancy Tribunal is an independent judicial body that resolves disputes between landlords and tenants [Source: Residential Tenancies Act 1986, Part 5]. Further assistance can be obtained from Tenancy Services, or by contacting a Community Law Centre for free advice.
Key Resources
- Tenancy Services: https://www.tenancy.govt.nz/
- New Zealand Legislation (Residential Tenancies Act 1986): https://www.legislation.govt.nz/act/public/1986/0120/latest/whole.html
- Community Law Centres: https://communitylaw.org.nz/
- Ministry of Justice (Tenancy Tribunal): https://www.justice.govt.nz/tribunals/tenancy/