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Home » Property Management » Can a Landlord Terminate a Lease to Sell a Rental Property?

If you’re wondering whether or not you can sell a rental property with tenants still in it, the short answer is yes. You can sell a rental property even if there are still tenants that live in it, or if their rental contract is still active.

As a real estate investor, you have the right to sell your property whenever you want to – as long as you agree to the rental agreement that you and your tenants signed. In short, if your tenant signed a year-long agreement, they should get to stay in the rental property for a year.

But Wait! What Does Your Lease Agreement Say?

A lease agreement is a legal contract that you and your tenant are obligated to abide by. Lease agreements generally state the length of time that a tenant can legally rent the unit. This is done to protect the property owner so that they don’t have to deal with tenants who overstay their welcome. It’s also common for lease agreements to contain a clause that states what’ll occur in case of a sale. This is done to ensure that tenants don’t end up on the streets the moment their landlord sells their rental unit.

Consult a real estate professional to find out what your contract actually contains. In some states, when a rental property is sold, the new owner also assumes the role of the current tenants’ new landlord. In other states, tenants can continue to live in the rental unit until the end of their rental contract.

Furthermore, partner with a property management company that can help you create a fool-proof contract. That way, you and your tenant will know what to do in case of a sale – will you cover their relocation costs? Can they continue to stay in their rental unit?

Is It a Good Idea to Sell a Tenant-Occupied Property?

Yes, you can sell a property that still has tenants, but that doesn’t mean you should. Here are a couple of considerations for selling a single-family home that still has tenants in it:

The Lease Agreement

The Lease Agreement

Selling a single-family home that has tenants in it is easy… as long as the tenants are on a month-to-month lease agreement. If that’s the case, all you need to do is give your tenants a 30- or 60-day notice to tell them that you’ll no longer renew the lease. Do note that you don’t need to tell your month-to-month tenant about the sale, but it would be responsible of you to do so.

However, if your tenant is on a long-term lease (e.g. one year), you can’t evict your tenant in case of a sale. They can continue to live on the rental property until the end of the rental period – unless, of course, they’ve violated the rules and regulations, and they haven’t been the best tenants (e.g. they haven’t been paying their rent on time).

The Potential Buyers

If you have month-to-month tenants, you will probably attract homebuyers who want to live in the home. On the other hand, if you have long-term tenants, you won’t be able to appeal to people who want to move into the home immediately. Your best bet, however, will be real estate investors who want a property with tenants who’ve already been vetted by a fellow investor, or by their reputable property management firm.

The Current Tenant

If you plan to sell your property to a real estate investor, note that your current tenant’s characteristics come into play, too. No one wants to purchase a property that comes with irresponsible or bad tenants (e.g. not paying rent, not cleaning the property, etc.). Sure, your property might be a good deal, but if it comes with troublesome tenants, it won’t be worth it to your buyers.

Communication is Key

Communication is Key

If you intend to sell a property with tenants in it, you need to tell your tenants ASAP. It would be awful if your tenants found out that their house was on sale on websites such as Zillow. They’ll probably panic and wonder if they’ll have to move out and be homeless for a month or two – or worse, they’ll be furious about it and take it out on you.

Before you find buyers, inform your tenants about your intentions. By doing this, you’ll be able to show them that you’re on their side – that you’ll be there to assist them at all times.

Can You Show a Property While Your Tenant Is in It?

Yes, you can show your property to potential homebuyers even when your tenants still live in it – as long as your tenants agree to it.

  • Schedule it at a convenient time. No one wants strangers showing up without warning. Your property management agent should arrange the showing at a time that’s convenient to your current tenant.
  • Request the tenant to not show up at the showing. No buyer wants to be followed around by a tenant. If possible, ask your tenant not to be at home during the showing – you can treat them to a complimentary coffee, or give them tickets to go see a movie.
  • Offer to clean the property. Your tenants shouldn’t have to worry about the showing – that’s your responsibility. Hire a professional cleaning service to get the property in tip-top shape.

Partner With the Experts at  Luxury Property Care

Selling a rental property that still has tenants in it can be complicated. That’s why it would be best to partner with South Florida real estate professionals. At Luxury Property Care, our experts will be by your side throughout the complex stages of the sale. We’ll make sure that your tenants won’t feel like they’ve been “abandoned” by you, and that your new homebuyers find everything they’re looking for.

Contact us at (561) 944 – 2992 or complete our contact form for more information. We’ll help you sell your South Florida home fast while continuing to stay true to the terms of your current lease agreement.

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