What happens if you buy a property subject to lease?

If you buy a property subject to a lease, then at settlement you become the landlord and are bound by the terms and conditions of the existing lease.

If you’ve bought a residential property with the intention of living there yourself, this means that you’ll have to wait until your tenant’s lease has been legally ended, in accordance with the Residential Tenancies legislation and regulations.

If you’ve bought a commercial property subject to lease, the vendor (if registered for GST) may mark the contract as a “going concern”.  This means that if you (as the purchaser) are also registered for GST, then GST will not be added to the contract price, and a tax invoice will not be issued.

As a landlord, you may want the property and the tenant professionally managed by a property manager.  If the vendor has a property manager already engaged, you have the option of continuing with the existing property manager (i.e. engaging them yourself), or alternatively engaging a new property manager.

If you decide to manage a residential property and the tenant yourself, you will have to receive a transfer of the bond that is held by the Residential Tenancies Bond Authority, so that you become the landlord recorded in relation to that bond.

For more information about buying a property subject to a lease, please contact Glenferrie Conveyancing in Northcote on 03 9815 2351.