Selling a house with tenants in it can be a confusing and complex situation. You have the right to sell the house if you are the owner, but the renters do have some rights too. This means that you need to follow some specific guidelines to try and make the process go more smoothly. A landlord selling a house without going through the right steps might find there are legal challenges.
Situations when you may need to sell the house with tenants
There are many situations that can crop up that lead to selling a house with tenants in it. The whole situation can be made much easier if your tenants are friendly and amicable, but problematic tenants can be another issue entirely. You might want to sell up because you plan to raise the funds for something else. A business venture, for example. Other reasons for sale include moving to another city or state. You might not want to be too far away from a property you own as you can’t manage it. The house could also be left when somebody passes away, and have to be divided within the impeachment process, which usually requires a sale so that equal shares can be distributed to those who are entitled, such as children of the deceased.
What problems it can cause
If you are wondering “can I sell my rental property with tenants in it?” Then the answer is “yes”. However, it is much simpler if you find a buyer who is happy to take on these tenants. People who have a property portfolio, or are trying to build one, might want to rent out any property they buy anyway. However, if you need to sell the house and someone wants to buy it to live in then this can bring a set of issues with problem tenants. It’s important to do some research first. Unfortunately, there isn’t just one standard rule for the whole of the US. Instead, state laws dictate what you can and can’t do. Even if you are acting within your rights, tenants might refuse to leave, refuse to pay, or in extreme cases, they might even sabotage your apartment in other ways. Disagreements between tenants and landlords are common, but if you learn the tenants’ rights when the house is for sale, what you can and can’t do under state law, and try to approach the sale with some sympathy for the tenant then you are likely to have fewer issues.
Tips on handling the sale smoothly
How can you approach selling a house with tenants in place in a way that enables a smooth process?
- Talking with tenants
It doesn’t have to be a confrontation. Let your tenants know your plans, and apologize that they might have to make other arrangements. It helps if you acknowledge that they have rights, and discuss their options based on the research you have done. If a landlord wants to sell their house fast before the lease is up, Tenants might have a right to stay in the home 30 days after the sale, or even longer, depending on what state you are in.
What would you do if you spent years working on your apartment, fought landlords, fought the city, built book shelves and shit and then the loudest human on earth moved in directly on the other side of your wall???? I can hear every one of this dude’s thoughts
— JAKE FLORES (@feraljokes) January 14, 2021
- Wait until the end of the contract
The best way to protect yourself legally is to wait and make the sale at the end of the contract. If you inform the tenant that you won’t be renewing their rental contract then you will have many more freedoms when the contract comes to an end. A tenant will know that they can’t live in a house indefinitely if they don’t own it, and this should give both parties the chance to prepare.
- Work together
If you expect the tenants to work with you then there is plenty that you can do to help the tenant, too. For example, if you are able to have viewings while there are tenants in place, you can ask them when this is most convenient and work around their needs. You might even signpost them to places where they can get another rental property in the area. Most tenants appreciate this kind of help. Whatever you do, communicate clearly with the tenants, as not much will annoy them as much as being kept out of the loop.
- How to deal with problems
If problems do crop up with tenants then there are things you can do. It’s important that you know what your rights are, and remind them of their responsibilities in law. You don’t want to have to go down the route of evicting a tenant, but if they refuse to leave when they legally have to then it might be inevitable. Always stay calm and fair in your discussions with a problematic tenant, even if they are being deliberately obtrusive. If things get really bad then you might also want to concede a bit of ground with your tenants. For example, you could agree to write off a month’s rent if they agree to leave. It’s far from ideal, and it isn’t fair on a landlord to lose money in this way. However, if you want to push through a sale, the money this raises probably matters a lot more to you.
‘Floods of tears’ as WA rental crisis forces people to surrender pets to animal shelters https://t.co/8xuHnbWQLP
— ABC Perth (@abcperth) January 17, 2021
Summing up
Selling a house with tenants in it, but if you stick to the laws in your state then you will be able to get them to leave in order to push through a sale. Awkward and problematic tenants can make things tougher, but this is why it is a good idea to protect yourself legally. If you can wait until the end of the contract, that’s even better. Whether you’re selling to pursue another property or other investments, or you need to sell to free up the value, tenants in place aren’t always a problem. If you sell to an investor, it can even be a positive thing, as they might keep the tenants to make a profit on the home.
