If you are an investor in the real estate business, it comes a time when you need to sell your house. Whether it’s a home or a rental property, there are several factors you need to consider before doing so. In most cases, only private homes are for sale, but at times you will find rental properties. Selling rental property with tenants can differ in many ways from selling it when vacant.
This article will give you a comprehensive guide on how you can sell your rental property without inconveniencing the tenants. Please read on.
Is it possible to sell a house with tenants?
Most landlords do own many properties until the situation becomes overwhelming, and they decide to dispose of some. Other than this, the landlords are relocating to other areas and want to dispose of their tenants’ properties. A few landlords will ask “Can I sell my rental property with tenants living in it?” The answer is, it is legal to sell your rental property with or without tenants on it, as long as you follow the right procedure. Some of the things you shouldn’t do include forcing the tenants out or changing their lease agreement when selling the house.
Which sale wins when selling a house with or without tenants?
It is hard to come up with a better answer to this, but it depends on the circumstances. It all varies with the type of property, the tenants therein, and your location. In most cases, selling a rental property with tenants is easy since ready buyers want to start earning their rental income immediately after purchasing. The seller’s advantage is that they don’t have to wait until the tenant’s lease is over before selling the house. On the other hand, selling a property without tenants is advantageous because you can market it to any buyer and has fewer processes and documentation than when you want to transfer the tenants’ agreements to the new owner.
What to do to the tenants before selling the house
It will help if you put your tenants in mind before agreeing to sell the house. It is important to note that their rights as tenants do not change before, during, and after the sale. If your tenants leased your property for two years, such should be held even when the house is on sale a month before the lease expiry. It would be perfect if you did not force out or interfere with the tenants, and you must tell them beforehand that the property is on sale, but their tenancy is intact. What if the buyer doesn’t need tenants? If that’s the case, you can postpone until the lease is over or try to find another buyer to take over the tenants. Forceful eviction and selling the house will attract lawsuits.
What are termination clauses?
In case you are planning to sell the house without tenants on future dates, it’s essential having a termination clause. This clause informs the tenants that you intend to sell the house at a future date where you will ask them to move before the expiry of the lease. This clause prevents having lawsuits in case you want to sell the house without tenants. If the existing tenants have no lease, you should consider respecting their lease and sell the house without interrupting their stay or waiting till the lease period is over.
How to sell your rental with tenants
There are procedures you need to adhere to while selling your house to tenants. Here are some step-to-step instructions:
- Study the local laws: before engaging your tenants, it’s essential to research the local laws regarding selling a property with tenants. This will enable you to handle the sale legally and efficiently, considering their notices, sales, and other factors.
- Review the lease: You should check on the lease agreements you had with your clients. You will want to know if a termination clause or any other factor is binding you with tenants.
- Notify your tenants: before finding a buyer, it’s essential to inform your tenants of your intent to sell the property. This will prepare them mentally and help in planning and showing the house to your buyer. Assure them the process is flawless and that they won’t be affected. Telling your tenants your intention to sell the house has less frustration than finding the third parties’ selling information.
- Consider the tenant: This step is optional and involves considering selling your house to a tenant or paying your tenants to leave when you can’t find anyone who can buy the house with tenants. Some tenants will find this to be a great opportunity if they were looking for properties to buy.
After finalizing the process, it is time now to market and sell your property. You can sell your house to an existing tenant, another landlord, investors, or anyone aspiring to be a landlord. Ensure the selling process is open and legal and that you don’t inconvenience your tenants. It would help if you also sat down with the tenants and the buyer as you hand over the leases to the new owner.
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