Buying a House with Tenants? Avoid Legal Traps

Buying a Property with Tenants in Queensland: What You Should Know

If you’re purchasing an investment property or home in Queensland, you might come across listings that say “tenanted” or “vacant possession.” But what does that mean, and how does it affect your purchase?

Buying a property that already has tenants can be either a smart move or a complicated one, depending on what your goals are. Whether you plan to move in yourself or continue renting it out, it’s good to get to know your rights and responsibilities before signing the contract.

At Cairns Conveyancing Solicitors, our experienced conveyancers in Cairns handle these transactions every day. Here’s a complete guide to help you make an informed decision.

What Does “Buying with Tenants” Mean?

When you buy a property with existing tenants, you’re purchasing it subject to an existing lease. That means the lease continues after settlement, and you become the new landlord.

You’ll inherit not only the tenants but also all the responsibilities that come with the lease: including rent collection, maintenance duties, and compliance with the Residential Tenancies and Rooming Accommodation Act 2008 (Qld).

The contract of sale must disclose any existing tenancy, and your buyer’s conveyancer will ensure you see a copy of the lease agreement before committing to the purchase.

How to Know If a Property Has Existing Tenants

There are a few easy ways to confirm whether a property is already tenanted:

• The real estate listing will usually indicate whether it’s vacant or leased.
• The “Tenancies” section of the contract of sale must disclose existing leases, including the tenant’s names, rent amount, and lease end date.
• You can request a copy of the tenancy agreement directly from the seller.

Should You Buy a Property with Tenants?

Owning a tenanted property can be convenient if you’re buying for investment purposes. Here’s what to consider:

Advantages:

• You begin earning rental income immediately after settlement.
• You avoid advertising and screening new tenants.
• You benefit from a transparent rental history and consistent income stream.

Disadvantages:

• You can’t move into the property until the lease ends or tenants vacate by agreement.
• Rental income might be below market value if the previous lease was outdated.
• You take on the risk of existing issues, such as unpaid rent or maintenance disputes.

If you’re uncertain whether the property aligns with your plans, your solicitor in Cairns can advise on your contractual rights and negotiation options.

What If You Want to Live in the Property?

If your plan is to make the property your home, timing and notice are key.

In Queensland, you’ll usually need to wait until the current lease ends, or the tenant vacates before moving in. Under tenancy laws, tenants have the right to remain in the property until the end of their fixed-term agreement, and you must give them at least two months’ written notice before requiring vacant possession.

You can, however, negotiate an earlier exit. This might involve offering an incentive, such as waiving rent for the final weeks or covering relocation costs. Such agreements must always be mutual and documented in writing.

Who Holds the Bond After Settlement?

The rental bond will already be held by the Residential Tenancies Authority (RTA). After settlement, your conveyancer will notify the RTA to update ownership records so rental payments and bond details reflect your name as the new landlord.

You don’t receive the bond directly, and it stays in trust until the tenants vacate and the final inspection is completed.

What Responsibilities Will You Inherit?

As the new property owner, you step fully into the role of landlord. This includes:

• Maintaining the premises in a safe, habitable condition.
• Managing repairs promptly and within legal time frames.
• Meeting minimum housing standards under Queensland tenancy legislation.
• Ensuring that tenants have your current contact details (or those of your property manager).

If the property doesn’t already have a manager, it’s wise to engage one to streamline rent collection and handle tenant communications professionally.

Your seller’s conveyancer can help transfer management agreements at settlement to make the transition easier.

Can You Choose Your Own Property Manager?

Absolutely. You’re not required to stick with the existing manager. If you prefer a different agency, you can appoint your own property manager to take over as soon as the purchase settles.

Your new agent will handle rent transfers, introduce themselves to the tenants, and manage ongoing obligations on your behalf. This ensures a seamless changeover and peace of mind for both you and your tenants.

Legal and Practical Considerations

Buying a tenanted property requires thoughtful planning. Here are a few extra points to keep in mind:

• The contract of sale should clearly define whether the property will be sold with tenants in place or with vacant possession.
• You’ll need to provide tenants with written notice of the change in ownership, including where rent should now be paid.
• If you’re planning to apply for a home buyer transfer duty concession, note that you generally must move in within 12 months of settlement and cannot lease it out during that time.

For a smooth process, always work with an experienced conveyancer familiar with Queensland tenancy laws and procedures.

At Cairns Conveyancing Solicitors, we also provide reliable conveyancing for sellers to help both parties achieve a legally sound, stress-free handover.

Disclaimer: This blog is intended for informational purposes only and does not constitute legal advice. For guidance tailored to your specific circumstances, please consult a qualified legal representative.