Do changes to the Residential Tenancies Act 2010 affect you?

Date: Sep 08, 2014

If you have recently inherited property it is important you understand your obligations as a landlord. Recent amendments to the Residential Tenancies Act 2010 are worth considering. 

Amendments to section 100(1)(c) of the Residential Tenancies Act 2010 (NSW) will affect the right to tenant-instigated termination of fixed-term agreements. The change to the act took effect as of July 4 2014.

The change to s 100(1)(c) states that a tenant can only provide a termination notice for a fixed-term agreement without compensation, if the landlord has notified the tenant of the landlord's intention to sell the residential premises, unless the landlord disclosed the proposed sale of the premises before entering into the residential tenancy agreement as required by section 26.

In a media release, the Real Estate Institute of New South Wales stated that in the past there have been issues with the act and the amendment to s 100(1)(c) will hopefully provide a more clear understanding of how this section of the act operates. 

Prior to the amendment a tenant could end a fixed-term agreement without needing to compensate the landlord due to lack of disclosure, even if there was no intention of selling the property before the tenant signed the agreement. 

The changes to the act mean that if a contract of sale has been prepared for the premises and it is not disclosed to the tenant, then the tenant has the right to terminate the contract.

Agreements signed prior to the amendment are covered by the act, but termination notices given prior to July 4 2014 will not be affected by the changes to s 100(1)(c).

If you are considering selling inherited property and are letting new tenants it is important to inform them if a contract of sale has been prepared. 

What is the Residential Tenancies Act 2010?

The act applies to existing and future residential tenancy agreements. A residential tenancy is defined in the act as "an agreement under which a person grants to another person for value a right of occupation of residential premises for the purpose of use as a residence".

The rights and obligations of landlords and tenants and rents, rental bonds and other matters related to residential tenancy agreements are also covered under the act. 

Residential premises not included in the act are nursing homes, serviced apartments, hotels, motels, backpackers' hostels and parts of a club that also have accommodation available to the public. Boarders and lodgers are also not covered by the act. 

If you are a landlord and are considering your obligations or want to know more about a property settlement agreement, get in touch with a property lawyer.