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Buyers beware - You might end up with a tenant you did not want

If you have signed a contract, or about to sign a contract, then be aware that any current tenancy agreement might remain in place after settlement - whether you want it or not. Most recently, the Queensland Government has passed the Residential Tenancies and Rooming Accommodation (COVID-19 Emergency Response) Regulation 2020. The following is a summary of the changes:

Six month moratorium on evictions

From 29 March 2020, a landlord cannot evict a tenant within the next six months if that tenant:

  1. is suffering excessive hardship due to the COVID-19 emergency - ‘excessive hardship’ is defined in the legislation;

  2. the tenant suffers a loss of income of 25% or more; or,

  3. the rent payable is 30% or more of the tenant’s income.

During this moratorium on evictions, the Queensland Government has also announced:

  • tenants in financial distress who cannot meet their rent commitments cannot be listed in a tenancy database for rent arrears;

  • fixed term agreements due to expire during the COVID-19 pandemic will be extended to 30 September 2020 unless the tenant requests a shorter term;

  • break lease fees are capped at 7 days for eligible tenants whose household income has been reduced by at least 75% and have savings of less than $5,000; and,

  • tenants may refuse physical entry for non-essential reasons, including routine repairs and inspections. However, tenants must agree to virtual inspections if physical inspections are not agreed to.

What does this mean for buyers and sellers?

When you sign a contract, it will usually specify whether there is an existing tenancy and whether it will remain in place after settlement. Previously, in some circumstances, a seller has been able to give notice to a tenant bringing the tenancy to an end. During the moratorium period, this may not be possible. Likewise, if a buyer has signed a contract with the intention of vacant possession being provided at settlement, this may also not occur. In this scenario, a seller could potentially be in default of the contract by not being able to provide vacant possession. A buyer may be able to void a contract if it does not receive vacant possession on settlement.

How can we help

If you have signed a contract with a residential tenancy in place and you want to know how it may affect you, our team is here to help.

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