Can you legally sell your rental property with tenants in it? This is a common question many landlords ask when a need arises for them to sell their property. The truth of the matter is YES, it’s possible to sell a property with tenants in it but you have to do it creatively and diplomatically to ensure that tenant rights are not violated. Selling a tenant-occupied home is challenging at times because there is less demand for such properties by home buyers and the existing tenancy agreement contracts.
As a landlord facing such a dilemma, you can use the following creative tips to sell a rental property with tenants successfully and within the legal framework.
1. Assess The Current Lease And Wait Until The Lease Time Expires
If the issue that is making you sell your property is not urgent, you can review existing tenant leases and wait for them to expire. There are monthly leases and fixed-term leases. If your property has tenants who are occupying it on a month-month basis, you can prefer not to let them renew their contracts at the end of the month. However, if the tenants are on a fixed-term lease, you will be forced to respect the contract and wait until the lease expires and your tenants will move out.
2. Selling The Rental Property To A Real Estate Investor With An Active Lease On It
If you can’t wait until the fixed-term lease expires, you have the option of approaching a professional real estate investor. Since investors are in real estate to make profits, they would appreciate negotiating with you for a deal if you have a property which is already occupied by tenants.
When you finally manage to sell your rental property to a real estate investor with an active lease on it, he will automatically become the new landlord. Also, it’s important to note that in such as situation, all the lease agreements and security deposit is transferred together with the rental property.
When you engage an investor, they will buy your property as is and for cash. This will save you a lot of time and money thus, allowing you to fully concentrate on your next project.
3. Negotiate For “Cash for Keys” Deals With The Tenants
Although the tenants have a right to live in your property until their fixed-lease period expires, the law has provided a room for negotiations in case an urgent matter arises. If as a landlord you have found an interested home buyer who is offering you a good deal but on the condition that the property be empty, you can negotiate with your current tenants for a deal.
The “Cash for Keys” deal is where you compensate the tenants with a reasonable package for mutually-agreeing to terminate the lease contract pre-maturely. It’s also important to note that tenants are at liberty to agree or decline your offer and it’s illegal to force them to do so under duress.
4. Consider Selling The Rental Property To The Tenants
Another easy way to dispose a tenant-occupied property is to approach your current tenants and offer them an opportunity to buy. To make the deal even lucrative, you can make arrangement for a seller financing arrangements such as rent-to-own agreements.
Your current tenants are the best targets because they already have an experience in living in your property. Many tenants who will have the means will prefer this option rather than moving out. However, this option can only work if you don’t have any outstanding loan or your mortgage lender approves such arrangements under certain terms.