Selling a tenanted property

Recently we had some excellent questions about an agent selling a property, where the property was being managed by another (uncooperative) agent.

This can be particularly sticky where the managing agent may have granted an option extending the lease, without the approval (or knowledge) of the property owner.

Q1: Does an agent selling a property have to disclose tenancies to a buyer ?

Absolutely "YES".  These details must be written, in full, and correctly, on the contract.

 Q2: Can a Managing Agent grant an option to extend the lease without the Owner's authority ?

Absolutely "NO".   An agent cannot act outside their authority.  If they do so, they become liable for any losses suffered as a result.

Q3: If a Managing Agent does wrongly grant an option, will it in any case bind the owner ?

The answer will often be "Yes" - but will depend on the circumstances.  Was there fraud ? Was there collusion with the tenant ? What, exactly, was the authority the Managing Agent had ?

The facts will have to be carefully considered, to answer this question properly.

Q4: Assuming a binding option was granted, and the seller didn't know, can the selling agent be liable for non-disclosure on a sale contract ?

The answer can very easily be "Yes".  For example: 

• If a selling agent makes all reasonable enquiries, and documents those enquiries, and after taking all reasonable steps still did not discover that there was an option ... then it would be very unlikely that the selling agent would be liable.

-however-

• If a selling agent could have discovered the option by making enquiries, but either for lack of experience, or lack of systems, did not obtain sufficient information ... then the selling agent may find themselves liable to the seller. 

Putting this in a nutshell ... a selling agent has a duty to the seller to make reasonable enquiries regarding the property, so that a contract of sale can be properly drawn.  When a selling agent knows the property is being managed by another agent, the selling agent should (for example) contact the managing agent and request and follow up for details of the leases ... including rent, expiry date, any options, and so on.

Web-site improvements

This week, we have added a stamp duty calculator for buyers:

              ... find this at                        www.hainslaw.com.au

              ... by choosing:                     Ø Property    

            ... and then:                 Ø Stamp duty & costs & fees calculator

Alternatively, click this link to get there directly.

Searches required by lenders

In earlier weekly newsletters, we have commented that different lenders require different searches.  These searches are "hidden costs" with some lenders.

Now, our website calculator lets buyers choose their lender, and immediately see which searches that lender requires.

As an example - look at the website calculator and select a "Unit" with the lender "Wizard" !!

Kindest regards,