Tenanted Properties

Settlements of tenanted properties whether they be residential or commercial require additional skills, knowledge and experience to ensure that all information is provided to the Buyer at or prior to Settlement.

The staff at Haskins Settlements are very experienced in this specialised area of conveyancing.

As soon as we become aware that the property is tenanted we would contact the managing agent (or the Seller) to obtain information regarding the tenant(s). These enquiries are undertaken regardless of whom we are acting for.The obtaining of this infor mation is an essential part of the conveyancer's role in acting in their client's best interests.

Firstly it enables us to confirm details that may be included in the Contract eg a tenancy schedule; amount of rent disclosed etc and secondly it enables us to formulate accurate settlement statements for our client.

If acting for a seller this information would be important in ascertaining whether there are any arrears of rent etc which must be recovered by the seller prior to Settlement.

In acting for a buyer this information is provided to the buyer and is very useful in confirming representations made prior to the purchase and also in establishing exactly what the tenants pay and when.

The information we request for the settlement of a commercial/retail or industrial property would include: 

  1. Name of the tenants.
  2. Date of commencement of the lease and details of any options.
  3. Have any options been exercised.
  4. Where are the original Leases.
  5. Amount of rent and date paid to.
  6. Are there any bonds or bank guarantees held
  7. Are there any rent free periods or other tenant benefits that the buyer will be required to honour?
  8. Amount of monthly variable outgoings and date paid to.
  9. Do the tenants pay rates, taxes and levies upon assessment or via variable outgoings.
  10. If rates, taxes and levies are paid upon assessment, have the tenants made all payments to date.
  11. Are the rates, taxes and levies paid from owner's funds and then reimbursed by the tenant.
  12. If the property is managed by an agent we would enquire as to whether they are retaining management.
  13. We also request details of any other information that would be of interest to the incoming buyer.

The enquiries made in relation to a residential property are as follows:

  1. Name of tenant.
  2. Date of commencement of the tenancy.
  3. Request a copy of the tenancy agreement.
  4. Request a copy of the property condition report.
  5. Confirm how much bond is held and where.
  6. Confirm amount of rent, how paid (eg weekly/fortnightly) and date paid to.
  7. Enquire as to whether management was being retained.

All of the above information is provided to the Buyer.

There are a lot of variables in dealing with tenanted commercial, retail or industrial properties, particularly relating to rent and rates adjustments. A conveyancer cannot make these determinations until they have made enquiries with the managing agent or have read the Lease.

Conveyancers cannot provide legal advice on Lease documents however a prudent Conveyancer would be able to identify areas of concern and bring these to their client's attention and recommend that they seek legal advice for any clarification. For this reason it is imperative to appoint a conveyancer who has experience in this area.

Other issues to be considered include the checking of encumbrances on the Title eg caveats or leases to ascertain whether the caveator/lessee still has a registered interest in the land. If caveators cannot be located there are other methods that can be used to remove the caveats.  If Lessee of a registered lease no longer has an interest in the land the Lease should be surrendered or evidence provided to the Registrar of Titles to enable the lease to be removed.

When selling a commercial property we consider it prudent to conduct a full title search, including all caveats, and ascertaining which caveats are to remain and which need to be removed. If any caveats are identified as being "old" or "expired" then contact should be made immediately with a reputable conveyancer who can arrange to have the caveats withdrawn well BEFORE any settlement date.

It is imperative that when you sell a property that is tenanted that a condition is placed on the Contract that states the property is sold subject to the existing tenancies. This will alert the conveyancers or solicitors involved to this fact so that the enquiries mentioned above can be made.

Failure to make this notification on the Contract could result in the conveyancer or solicitor proceeding to Settlement under the mistaken belief that the property has been sold with vacant possession. This could result in the Seller being unable to recover monies owing to them by the Tenants and would result in the Buyer not being provided with all the information they require to effectively manage the property.

If management remains with the same agent it may not be necessary for us to attend to a rent adjustment however if rent monies, for a period after the settlement date, have been paid to the Seller it is imperative that rent be adjusted at Settlement. If a Seller manages the property then the Bond paid in relation to a residential property would need to be transferred to the Buyer and we would arrange to have a bond transfer form signed. If a Bank Guarantee has been put in place on a Commercial Property, this Guarantee would need to be cancelled with a new one issued in the Buyer's name and handed over on settlement.

Haskins Settlements specializes in the settlements of commercial, retail and industrial properties and is very experienced in the area of tenanted commercial, retail and industrial properties having effected a number of settlements over the years they have been in practice.

When it comes to looking after your best interests in commercial, industrial or retail property (vacant or tenanted) you can look no further than Haskins.

Put us to the test today and let our experience and knowledge work for you.