What happens to a property sale if leases and options were not disclosed?

First home buyers/owner-occupiers and investors approach a property with different mindsets. While the latter is not too worked upon immediate possession or an undisclosed lease, the former might want to move in immediately. Naturally, the prospective FHB or owner-occupier likes to know all about the term of the lease (periodic or fixed), details of possession (vacant or tenanted) and whether the lease document is precisely reflected in the Contract of Sale.

Vacant possession

Unless mentioned otherwise and the details of possession clearly established, it is taken as granted that the person/company/trust buying a property is getting a vacant possession. Sometimes, the vendor has certain hidden interests in hiding the fact of tenancy and at other times he believes that the letting agent will terminate the lease prior to the settlement date – thus bestowing “vacant possession” to the buyer anyways.

Lease document

All is well with the idea but the letting agent and the selling agent don’t always work in tandem and confusions with tenancy agreement result in a weird scenario – the contract of sale showing “vacant possession” and lease document showing fixed term tenancy that has not expired yet.

Contract termination

As a buyer you are fairly entitled to terminate the contract in such cases on grounds of undisclosed lease. It is because the given scenarios can actually play out that you are asked to be more diligent as a buyer.

For instance, it is important to ask for the lease document the moment you sit back to reflect on the authenticity of the Contract of Sale. It is important to figure out whether the sale contract has disclosed everything the lease document has.

Homes with existing tenants

It is not that the buyers have never bought homes with existing tenants. They do it just so often. The only thing they ask for is that they are not misguided through the process. If it is a periodic lease, they wish it terminated before the settlement date (as mentioned in the Contract of Sale) and if it is a fixed lease, they want to know about its exact expiry. Worth noting- Often, buyers use “existing tenants” as a tool for bargain and on certain occasions they themselves choose such properties.

While buying a property, you are going to need a solicitor who is well versed with the Contract of Sale, pre-settlement inspections and lease contracts. We will be glad to assist you in your pursuit.