When ownership changes mid-tenancy: the PM's role

A common scenario property managers face is a Lessor deciding to sell a tenanted property they're managing. It's important for property managers to understand not only the legislative requirements during this process, but their responsibility to advise the tenant of the transfer of ownership as outlined in the RTRA Act as an Attornment Notice.

242 Transfer by Lessor (1). The Lessor must - 

(a) if the Lessor proposes to transfer the Lessor's interest in the premises to another person (the buyer) -  give written notice of the tenancy to the buyer.

(b) if the Lessor transfers the interest subject to the tenancy - give written notice of the transfer (the attornment notice) to the tenant.

Where the property manager has been the managing agent prior to the sale and will continue to do so after the sale, the attornment is a relatively simple process of providing the tenant with written notice of the transfer of ownership.

While there's no prescribed form of an Attornment Notice, Realworks provides members with templates for this process, in addition to other templates (see below).

The 18a General Tenancy Agreement outlines the owner's details in Item 1 which will change upon sale, although the agency details will remain the same. By attaching a copy of the Attornment Notice to the Tenancy Agreement, you've effectively replaced the ownership details outlined in Item 1 without the requirement of a new agreement.

Should the Lessor/agent need to complete an Application to QCAT, the general tenancy agreement (above) forms part of the application process. The current Lessor's name will be different to that on the General Tenancy Agreement 18a, therefore, a copy of the Attornment Notice will need to be attached to the QCAT Application to show evidence of the change so any subsequent orders reflect the current ownership.

If the management of the property has been transferred to your agency from another agent upon settlement, then the buyer should advise their solicitors to ensure an Attornment Notice has been provided to the tenant. A copy of this notice should also be provided to the new managing agent.

You can refer the buyer to the REIQ's Contract for Residential Houses and Land, condition 5.3 (1) (e) - see the extract below.

REIQ Members seeking further advice on this topic or any other area of property management can call or email the Property Management Support Service Team. Not a member? Join us today!