Regardless of why you are selling your rental property, be sure you are well-informed of the responsibilities you have to both buyer and tenant. There are several rights your tenant possess that protect them from you unlawfully selling the property out from under them. Let’s dive deeper into what it means to sell a property as a landlord and be sure all parties are represented.
Current Tenants
The first decision you will need to make is whether you will ask the current tenant to find another place to live or if you are going to sell the property with the tenant living there. If you want to sell the property without the tenant, you will need to provide a 30-day written notice of the move-out day you are requesting. Otherwise let your tenant know that you are planning to sell the property and they are not required to move-out. Another clean option would be to wait to sell the property until the lease is almost up and send a letter 60 days prior to the lease ending notifying the tenant of non-renewal.
Property Showings with Tenants
When showing with a tenant, you are required to give a 24 to 48-hour notice that a showing will take place. Allowing your tenant to prepare to be out of the house and making sure it works with their schedule. It’s important to note that your relationship with the tenant can go a long way as you're presenting the property to potential buyers. Good tenants will help you showcase the property in good standing condition while poor relations could cause potential issues for the tour.
Rental Property Repairs
Whether selling with or without a tenant, you are responsible for repairs unless the sale is marketed as-is. These repairs can range from anything that happens randomly or by the tenant, to whatever reasonable requests that may be asked by the buyers. While you’re not legally required to make repairs prior to selling investment property, having a high-quality property will bring higher quality offers. You may want to consult with a Broker to determine which repairs will yield the highest return on investment.
Outstanding Security Deposits
There are two routes when it comes to the security deposit. You will either 1) return the security deposit under the guidelines stated on the lease agreement or 2) you will pass the money on to the new homeowner managing the tenant. The security deposit is one of the items that must follow any contract that has been agreed upon so make sure you review these outstanding contracts.
Move-Out Incentives
In order to ensure tenant cooperation, you may want to come up with several incentives that will intrigue your tenant. These can help your tenant realize that you are not trying to put them out in any way. Ideas can range from giving a discount on the rent during the months that showings are being done to helping them with move-out expenses. This approach is up to you and what your current relationship is with your tenant. If you have other vacant properties, you may consider offering incentives for the good tenants to move to the new home.
Contact Us for Investment Property Guidance
Just because you are selling a property that has or had a renter, does not mean you are able to make any changes for the purpose of the sale. You are to adhere to all mentioned conditions in the lease as well as follow laws for landlords. An example of something that you are not allowed to do is turn off any utilities while you are in the process of selling. As for property improvements, you can make arrangements with tenants, but they are legally not required to agree or do not have to accept higher rents while still in an active lease.
There is no doubt that selling a property that has a renter can be a tricky game. With over 20 years of experience, Doug has an arsenal of information to help you get the best offer on your property while making sure the tenant is taken care of to prevent any wrongful proceedings that will get you a lawsuit. Grimm Realty Group can help you navigate the selling process & help to analyze the property for potential improvements. Even if you’re not looking to sell this year, knowing what the property is currently worth & having a list of recommended upgrades can help prepare you for listing in the future. Give us a Call with any questions or Schedule a Market Analysis today!
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Rental Property Owner Obligations Sources:
RentPrep: How To Sell A Tenant-Occupied Property
Apartments.com: Tenants' Rights When Selling an Occupied Rental Property
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