Do you have a property that is rented and want to sell it? Are you wondering if you can legally sell the property with a tenant and what are the implications? If you find yourself in this conundrum, keep reading to learn the answers.
Selling A House That Is Rented
Back during the housing crisis a lot of homeowners became landlords that didn’t want to be. They had a property that they couldn’t sell and in order to help cover costs they just put a tenant in the property. Now that the market has recovered, many of these homeowners want to sell their property. The question is can you legally sell the property with tenants in it? The short answer is Yes. However there are some things that you need to be aware of before putting the house on the market.
Tenants have rights, and sometimes it almost seems like they have more rights than the property owners. If you decide to sell the property you can’t just give them notice that they have to move within a few weeks. It really depends on the type of lease they have and if they are in any violation of that lease as well as the state laws that the property is located. Another thing that you are going to have to take into consideration is how well you and your tenant get along.
Your tenant relationship is really going to come into play when it comes time to show the house. In a previous article “Tips When Trying To Sell Your House Fast” we went indepth about how to get potential buyers to check out the house. With tenants this can be a little more difficult due to the fact that you can’t just walk in at anytime to show the property. Viewings will have to be properly scheduled with the tenant as not to break the law, or worse aggravate them to where they can make it more difficult to sell your property.
If you are lucky enough to have your tenant on a month to month, then things will be much easier. You can simply give notice that you will not be renewing their lease next month. However, if they have a yearly lease, things may be a little more difficult and hopefully you are on good terms with your tenant to make the process easier.
Selling Your Property With A Tenant That Has A Long Lease
There are a few things that you can do when selling your property that has a tenant with a long lease that is still in force. The first thing you can do is the obvious, wait for the lease to expire:
Wait for the lease to expire
Most real estate agents would argue that a seller should wait for the rental agreement to expire. Tenants can sometimes be a bit of a wild card in the high-stakes real estate game, so some agents feel it’s best to proceed after the tenant leaves. After that, make some cosmetic fixes to clean up the home, and sell it vacant.
Waiting may be especially important if you have a difficult tenant or one who is unhappy that their home is “being sold out from under them.” The last thing you want is to make showing the home more difficult — and a disgruntled tenant could easily do that by mucking up paint or leaving his place a mess. The result is that your property looks less appealing to potential buyers, which can have a dramatic effect on your bottom line.
On the other hand, selling a vacant rental unit isn’t always ideal for the seller’s finances. It can take months from the time the home goes on the market until it’s sold — months during which the landlord receives no rent. This can be especially trying for sellers whose homes have been a long-term financial burden.
There are a lot of good points to be argued in that previous article. The last one is something that a lot of homeowners will have to think about if they have another property and may end up paying the mortgage on TWO properties for a few months prior to selling the rental.
If you want to sell your house quickly without a tenant, which is what most realtors recommend, you can always consider paying your tenant to leave:
Pay your tenant to vacate
Yes, you read that right.
Paying someone to leave your house might be your best option if you need to sell immediately.
But how much do you offer?
Do a quick Trulia search to find the average rent in your area. If typical rents are more than you’ve been charging, offer the difference multiplied by the number of months left on your tenant’s lease. You could also offer to pay any moving costs. If your tenant won’t budge, throw in some extra cash to pay the security deposit for the new place.
In the end, your tenant doesn’t have to accept any cash you offer. You might just have to wait.
If you are on good terms with your tenant and they are flexible, this may be a good option for you, provided they don’t want to much cash.
There is still another option that may work well for some, and that is selling your property to an investor, or an investor that already has rental properties and is looking to acquire more:
Sell your property to another landlord
It’s not what it sounds like, but you can sell your property together with tenants. It’s not against the law to sell the occupied property and let tenants stay until the lease is up if the new owner is ready to adopt a role of a landlord. However, this approach is associated with a number of issues. First, it means that your list of potential buyers will be narrowed down to those who are looking for a buy-to-let. Second, you’ll have to settle the issue with your tenants. After all, they’ll have to live in a property for sale, which means open houses and property inspections. And, as you remember, you can’t just let potential buyers without giving a prior notice to your tenants because it would be a violation of tenants’ rights.
This could really be a great option for a lot of homeowners. You could start your search online for companies that buy houses and contact them to find one that does by rentals. If your property is in the Metro Atlanta area, we are one of those companies and you can learn more on our site at www.MandichPropertyGroup.com.
Lastly we wanted to share this great Youtube video that shares a lot about selling your rented property:
Summing It Up
Yes you can sell a property that is rented. However you need to remember that your tenant has rights. If you aren’t selling your property to another investor we highly suggest that you consult with an attorney before putting your property on the market to make sure you don’t break any tenant laws and help protect yourself.