Considering selling
Question from Sharareh updated on 28th June 2015:
I have recently signed a fixed term property management contract with a management firm. However, I am considering selling my property. Does my fixed agreement with the property manager create any problem with this and if so how I can address it?
Our expert Bernard Parker responded:
If you place the property on the market there are several issues that arise. Firstly, a tenant must be advised as soon as the property is placed on the market. This includes the period before a tenancy starts, and prospective tenants must be advised of a property is on the market. Secondly, if a tenancy is for a fixed term the tenant has the right to continue until the end of that term. Thirdly, your management agreement with the property management company will have given the company an expectation that they can generate a fee income by managing the property for the specified term. A property can be sold while under a fixed-term tenancy agreement, as long as the purchaser does not want vacant possession. If the ownership changes the tenancy continues with a new owner. If the management agreement ends upon change of ownership, you will probably owe the property management company the balance of the management fees that would have been earned during the initial fixed term.
Bernard is principal of Quinovic – Kapiti-Mana. Quinovic's outstanding people and systems provide the most professional, effective and reliable residential property management service in the NZ market for over 30 years.Search the Ask an Expert archive
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