Possession for premises being sold

Under s 91ZZB of the Residential Tenancies Act 1997 (Vic) (RTA), a residential rental provider may give a renter a notice to vacate the premises if:

(1) the premises are immediately after the termination date to be sold or offered for sale with vacant possession;

Section 91ZZB(2) and s 91ZZB(3) also provide for other bases on which a rental provider to give the renter a notice to vacate if they have entered into a contract of sale for the rented premises and either:

• the contract of sale is subject to one or more conditions which, if not satisfied, entitle a party to the contract to terminate the contract, and the last of those conditions has been satisfied within 14 days of the giving of the notice to vacate (s 91ZZB(2); or
• the contract of sale is not a contract of sale which is subject to one or more conditions which, if not satisfied, entitle a party to the contract to terminate the contract, and the contract of sale was entered into within 14 days of the giving of the notice to vacate (s 91ZZB(3).

Section 91ZZB(4) of provides that the notice must specify a termination date that is not less than 60 days after the date on which the notice was given.

Equivalent ‘sale’ notice to vacate provisions apply to rooming houses (s 142ZJ), caravan parks (s 206AZ) and mortgagees entitled to recover possession of Part 4A sites (s 207ZI). A separate scheme applies to specialist disability accommodation (s 498ZX(1)(k)).

What is vacant possession?

Vacant possession refers to a purchaser’s right to have exclusive use of a property on completion of a contract of sale. The property must be free from any occupants, including tenants.

The residential rental provider’s notice to vacate and documentary evidence should be interrogated to confirm the property is to be sold with vacant possession.

What is “immediate” sale or offering for sale?

The word ‘immediately’ was considered by the Tribunal in Wade v McKenzie (Residential Tenancies) [2016] VCAT 482 which cited the decision of Lister v Forth Dry Dock & Engineering Co Ltd [1990] 1 AC 546 at 576 that the word ‘in its ordinary signification […] involves the notion that there is, between two relevant events, no intervening space, lapse of time or event of any significance’. The Tribunal opined that ‘immediately’ varies with context, and the circumstances may determine the proximity to the event that is necessary.

What are the formal requirements of a sale of property notice to vacate?

Section 91ZZO lists several formal requirements of notices to vacate issued under s 91ZZB to be valid, including new documentary evidence requirements (further detail below). These are detailed on Checking a Notice to Vacate.

Fixed term leases

Where the tenancy is for a fixed term, a notice to vacate under s 91ZZB is of no effect if it specifies a termination date that is before the end date of the fixed term lease: s 91ZZI(1)(b).

Similarly, if the fixed term lease includes a provision permitting the residential rental provider or the renter to terminate the agreement by notice, other than on the grounds of a breach, the notice to vacate is of no effect if the notice period is less than what is required under the lease: s 91ZZI(1)(a)(i).

Defending a possession order application

The Tribunal can only make a possession order if (s 330(1)):

• a residential rental provider was entitled to give the notice to vacate (and the notice has not been withdrawn); and
• it is reasonable and proportionate (as defined by s 330A) to make the possession order, taking into account the interests of the residential rental provider, the renter, any co-renters and any neighbours who have been affected or may be affected by the acts of the renter.

In applying the reasonable and proportionate test, the Tribunal must consider (amongst other things) whether any other order or course of action is reasonably available instead of making a possession order: s 330A(h).

The reasonable and proportionate test in s 330A was introduced in 2021 and therefore there is limited case law available on its operation. However, an equivalent test applied under the COVID-19 temporary tenancy laws. Despite this, the majority of decisions by the Tribunal in the context of an application under s 549(2)(j) of the RTA (repealed) for sale of the property by the rental provider considered whether it was reasonable and proportionate to make a termination order, not a possession order.

Criteria (h) to (j) of s 330A are relevant considerations where the landlord intends to sell[1], or move into the rented premises[2]. It has been observed that criteria (h) overlaps (j)[3]. In particular, the Tribunal has considered in relation to:

• (h) any other reasonably available course of action – dismissal of the application[4] or whether the rental provider could rent[5], or temporarily relocate to[6], another property. The Tribunal has considered the notice given to the renter[7].
• (i) the behaviour of the rental provider – whether the residential rental provider ambushed the renter or offered assistance and support[8]. In obiter, it was also stated with respect to this criterion that there are perhaps issues as to the rental provider unreasonably interfering with the renter’s quiet enjoyment of the rented premises[9].
• (j) – any other reasonably available course of action – The Tribunal has balanced the various hardships, vulnerabilities and personal circumstances of the parties[10] as well as their needs[11]. For example, medical and financial circumstances[12], and the rental provider’s other available living arrangements[13].

The following decisions of the Tribunal in relation to termination and possession order applications brought under s 549(2)(j) also consider issues:

• LKZ v BSL (Residential Tenancies) [2020] VCAT 909  – considers reasonable and proportionate test and the significance of a residential rental provider having alternate accommodation options available
• Holdings v Liddell [2020] VCAT 1015 – considers the impact of a lack of evidence of residential rental provider hardship on the reasonable and proportionate test as well as impact of being able to sell the property subject to tenancy.
• Phan v Gunarathna (Residential Tenancies) [2020] VCAT 1185 –considers the reasonable and proportionate test and balances the renters’ risk of homelessness against residential rental provider’s desire for economic gain.
• Lynch v Manion (Residential Tenancies) [2021] VCAT 1156 – considers the reasonable and proportionate test and the availability of other properties to the renter, conduct of the rental provider and the renter’s vulnerabilities.

In circumstances where a rental provider has previously issued multiple notices to vacate which have been dismissed, you may also find it helpful to consider the case of KZ V CGS (Residential Tenancies) [2021] VCAT 1391.

For more information see the Checking notices to vacate, When a rental provider ends the rental and Reasonable and proportionate test

What evidence?

As discussed above, the notice to vacate must provide sufficient detail of the reason for the issuing of the notice.

You should check that the property has in fact been listed for sale and if it has not, you should consider raising this at any possession order hearing to demonstrate that the rental provider does not have a genuine intention to sell.

Documentary evidence requirements

Section 91ZZO(e) includes new documentary evidence requirements that a notice to vacate issued under s 91ZZB must be accompanied by documentary evidence which supports the reason for giving the notice to be valid.

The documentary evidence requirements are new conditions under s 91ZZO(e). Documentary evidence in support of a sale notice to vacate was not required under s 259 of the RTA (repealed) or s 549(2)(j) of the temporary COVID-19 RTA laws (repealed), which contained similar sale of property provisions.

Under section 486A, the Director of Consumer Affairs Victoria (CAV), from time to time, may approve documentary evidence which supports the  reason for giving a notice to vacate under a s 91ZZO(e).

We recommend you check the up-to date list of approved documentary evidence which the Director publishes—

• in the Government Gazette; and
• on the CAV website.

It would also be expected that prior to the possession order hearing, a renter would be provided with details of any evidence to be relied upon by the rental provider in support of its application for possession. You may wish to consider requesting an adjournment if the other party is not forthcoming with the evidence they intend to rely on during the hearing, or applying for a directions hearing under s 80 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act). Section 80 empowers the Tribunal to give directions requiring a party to produce a document or provide information.

Section 104 of the VCAT Act give powers to subpoena parties to provide evidence under oath.

Is there a discretion to postpone a warrant for possession?

The Tribunal has the power to postpone the issuing of a warrant for possession after a possession order is made if satisfied that the renter would suffer hardship if the issue of the warrant were not postponed, and that hardship would exceed the residential rental provider’s: s 352.

Can a renter give a notice of intention to vacate to reduce the notice period if they want to leave?

Section 91ZB allows a renter who has a fixed term agreement and who has received a notice to vacate under s 91ZZB to give a notice of intention to vacate specifying a termination date that is not less than 14 days after the date on which the notice is given, irrespective of the date of the end of the fixed term.

Section 91ZB allows a renter who has a periodic agreement and who has received a notice to vacate under s 91ZZB to give a notice of intention to vacate specifying a termination date that is not less than 14 days after the date on which the notice is given.

References

1. Coppinger v Laskovski [2020] VCAT 986, [4]. cf The matters considered relevant in the case of LKZ v BSL [2020] VCAT 909 were criteria (h) and (j).
2. Koh v Thomas [2020] VCAT 591, [37]; Rizio v XEP [2020] VCAT 882, [24]; Struth v Thwaites [2020] VCAT 788, [22]; Servinis v Hartwick [2020] VCAT 1017 [21]. cf The Tribunal did not specify the individual criteria considered in Mikho v Burgess [2020] VCAT 691.
3. Servinis v Hartwick [2020] VCAT 1017, [30].
4. Servinis v Hartwick [2020] VCAT 1017, [24]; Baldacchino v Campbell [2020] VCAT 1032, [38].
5. See also LKZ v BSL [2020] VCAT 909, [27]. This circumstance was also considered in Mikho v Burgess [2020] VCAT 691, [13] although it was not expressly framed by reference to a criterion.
6. Struth v Thwaites [2020] VCAT 788, [24] – [26].
7. Struth v Thwaites [2020] VCAT 788, [24].
8. Struth v Thwaites [2020] VCAT 788 [28] – [30].
9. Koh v Thomas [2020] VCAT 591, [46].
10. eg Struth v Thwaites [2020] VCAT 788, [32]-[37]; Rizio v XEP [2020] VCAT 882, [31].
11. Baldacchino v Campbell [2020] VCAT 1032, [35]. cf Servinis v Hartwick [2020] VCAT 1017 , [26] – [27].
12. Struth v Thwaites [2020] VCAT 788, [32]-[37]; Rizio v XEP [2020] VCAT 882.
13. Struth v Thwaites [2020] VCAT 788, [32]-[37]; Rizio v XEP [2020] VCAT 882, [31]; Koh v Thomas [2020] VCAT 591, [47].