A termination notice served on a tenant is invalid if it does not specifically state that the landlord intends to enter into a binding agreement to sell the property within three months of the termination of the lease, the High Court held on 5 April 2016.

Details of the Case

A termination notice was served by a Receiver on a tenant who had been renting a residential property in Dublin for a number of years. As the tenant has been in occupation of the premises for more than six months, the tenant had acquired certain rights under the Residential Tenancies Act 2004 ("2004 Act"), including the right to continue in possession as a tenant for a period of four years from the commencement of the tenancy (also known as a Part 4 Tenancy). The 2004 Act provides, that a Part 4 Tenancy may be terminated where:

“The landlord intends, within 3 months after the termination of the tenancy under this section, to enter into an enforceable agreement for the transfer to another, for full consideration, of the whole of his or her interest in the dwelling or the property containing the dwelling”

The Receiver was seeking vacant possession of the property in anticipation of the sale of the house.  The termination notice served by the Receiver stated that “I require vacant possession of the above property as I intend to sell the property”.

Considerations of the High Court

The question before the High Court was what information must be contained in a valid termination notice when a landlord intends to sell the property which is subject to a Part 4 Tenancy.  The tenant argued that for a termination notice to be valid it was required not to merely state that the landlord intended to sell the property, but that it must state that he intended to sell the property within three months of the termination of the tenancy. The Private Residential Tenancies Board argued that the requirements as set out in the 2004 Act are directory and not mandatory, and that the termination notice sufficiently identified the reason for termination.

Decision

Justice Baker found that termination notice was invalid. Whilst a landlord can terminate on the grounds of an intended sale, she found that the landlord must have taken some initial steps to place the property on the market. Justice Baker noted that it did not seem to be the intention of the Oireachtas to permit a Part 4 Tenancy to be terminated merely in anticipation of the sale the property.

What can be learned from this case?

In order to terminate a Part 4 Tenancy on this ground, a landlord must genuinely intend to enter into a binding agreement within three months of the date of termination of the tenancy and this must be specifically provided for in the wording of the termination notice. In many cases this will require the landlord to have found a potential buyer or to have entered into negotiations for the sale of the property before a termination notice is served.

Statutory Declarations now a requirement 

As of 9 May 2016, tenants have further protection as there is now a statutory requirement for landlords to issue with the notice of termination, a declaration stating their intention to sell the property within three months from the date of the termination notice. It is hoped that this will combat the problem of tenants being evicted from properties on invalid grounds.

Hennessy v PRTB and John McStay, Receiver [2016] IEHC 174