How To Sell A Tenant-Occupied Property

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For those who own rental property, it can be an excellent source of added income. It can be convenient and simple to continue renting out the house, especially if you have a long-term tenant.

However, if a situation arises it may be necessary to sell the rental property. Here’s more on how you can sell a house with tenants.

Can You Sell a House While You Have Tenants?

The short answer to this question is yes, an owner is allowed to sell a rental property while there are tenants living in the property.

There are some rules related to the sale however and these will dictate when the property can be shown to potential buyers as well as what is allowed related to informing the tenant about the intent to sell as well as a full sale when or if it occurs.

Tenants are not required to be notified that the property they are renting is to be placed up for sale, but they are to be informed about arrangements for showing the property.

These notifications should be made in writing and the seller should retain copies of all correspondence made in regards to selling or showing the property.

This allows the tenant to be informed but also provides a level of security for the seller if there is a disagreement about notification later on.

If the seller wishes to evict the tenant they must also give them notice to let them know they are requesting that they move and that they are giving them 30 days’ notice (as required by the law) to vacate the premises.Go to top

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Can a Rental Property be Sold During a Fixed Term Tenancy?

Rental properties can be sold at any time during a rental. Having tenants living in the property does not take away from the owner’s rights to the property, including their right to sell the property.

Fixed term tenancies should be communicated to a potential buyer, however, as these can carry over to the new owner of the property. This means it is important to keep everyone informed, including the current tenant, about the potential changes that will be taking effect.

With a fixed term tenancy the tenant still retains their rental agreement and the use of the property, with certain caveats related to showing the property for potential buyers.Go to top

Is it Difficult to Sell a House with Tenants?

There are some difficulties that might arise in trying to sell a house that currently has tenants. Because there is someone living in the house it can be more difficult to show the property.Nevada Tenant Rights LawNevada law requires that the tenant allow the owner of the property to show it to prospective buyers, however, this can be difficult to arrange at times. Depending on the relationship between the seller and the tenant there can be difficulty in encouraging the tenant to keep the property looking a certain way during the process of the sale.

There can also be difficulty with access or with attempting to schedule when to show the house. There may also be difficulties selling a house with tenants because the buyer may not want to purchase a house with someone else already living there.

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If the buyer is not interested in using the property as a rental they may not like the idea of needing to evict a tenant or wait for their lease to expire. The buyer may also have difficulty seeing all of the property if there is a tenant living in it at the time.

Depending again on the relationship with the tenant it is possible the house will not be in prime condition when the buyer sees it, making it more difficult to sell.Go to top

How Much Notice Do You Need to Give a Tenant When Selling?

There is no exact requirement about letting a tenant know that the seller is selling the property that they live in provided the seller is not looking to evict them from the property.

Selling the property without notifying the tenant can be more difficult as this makes it impossible to show the property to prospective buyers, however, it is not a requirement.

  • If the seller intends to show the house, they must give the tenant 24 hours’ notice that it will be shown.
  • If the seller is looking to evict the tenant there are requirements for the length of time that they must give the tenant prior to eviction.
  • The amount of notice to evict is 30 days for a month-to-month agreement, which provides the tenant time to find another place to live and also covers the amount of time that they have already paid for.

In a fixed term lease the seller is not able to evict the tenant except in cases where the tenant has broken a rule or requirement of the contract signed by both parties.Go to top

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Can You Evict a Tenant When You Buy a House?

When purchasing a house that already has tenants living in it, the buyer must consider the agreement that is already underway between the seller and the tenant.

If the buyer does not wish to have tenants in the house they have purchased they must wait out the term of the lease and provide notice to the tenant.Notice to the TenantsFor a month-to-month lease, they must provide 30 days’ notice to the tenant that the lease will not be renewed. For a fixed term lease the buyer must still provide notice and must wait until the full term of the lease has been completed.

Buying a house does not end the agreements that have already been entered into, which is one reason a buyer should discuss the current leasing agreement with the seller prior to agreeing to the purchase.

If the buyer wishes to remove the tenants earlier than the lease agreement stipulates they may also negotiate with the tenant and may be able to pay for the tenant to leave the property early.

This is up to the tenant however, as they do have a legal right to remain on the property until the time of their eviction or their lease has expired, giving them at least 30 days to vacate the property.Go to top

What is a Letter to Tenant of Intent to Sell Property?

When informing a tenant of the intent to sell a piece of property the seller may use a letter to do so. These letters can be very simple and straightforward and do not require a great deal of information on the part of the seller.

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The seller may inform the tenant simply that they are selling the property or putting it up for sale and that they require the tenant to make the property available at such a time as they are going to show the property to a potential buyer.

This letter keeps the tenant informed and retains an open line of communication. This type of letter can be provided to the tenant merely as an informative letter or it may be provided as an eviction notice that informs the seller that they are required to vacate the property as pursuant to the law.

This means that it would inform the tenant that they have 30 days’ notice to vacate the property and that their lease will not be renewed.

In the case of a fixed term tenant, the letter can only inform them of the fact that the property will be put up for sale but can only notify them of an intent not to extend the lease if their lease is already set to expire.Go to top

What are the Tenants Rights When Selling a Property?

When it comes to selling a property the tenant still does have some rights. They are entitled to carry out the terms of their lease, which means they are not allowed to be evicted prior to the expiration of their lease (for fixed-term tenants_ or the 30-day eviction notice period (for month-to-month tenants).

They must also be notified 24 hours prior to an intent to show their house. These notifications must be made by the seller, in writing, and it is in the best interest of the seller to keep records of the notifications.

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A tenant may also have the right to purchase the property, though their bid is treated in the same manner as any other bid that is received by the seller. They do not get special priority or treatment under the law because they are the tenant at the time of the sale.

On top of this, the tenant has the right to some degree of privacy, though they are required to allow the owner of the property to show the house with regard to finding a buyer.Go to top

What Happens When You Sell a House with Tenants?

When selling a house with tenants the lease agreements will continue for the length of time originally agreed. Month-to-month lease agreements will continue until the end of the month period that has been paid for and the new owner of the house can choose to not extend the lease.

They may also choose to begin eviction proceedings if needed and must provide the tenant with at least 30 days’ notice to vacate the premises. With a fixed-term lease the tenant may remain in the property until such time as their lease has expired.

A tenant with a fixed-term lease may not be evicted unless they have violated any of the terms or conditions of the original lease. In selling the property to a new buyer all of the original agreements remain in effect until they would have expired anyway.

This means that a new buyer may not evict all tenants without following the same rules of law and meeting the obligations of the lease agreements that were already signed. A sale of the property does not negate the agreements that have already been made.Go to top

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Is it Better to Sell a House With or Without Tenants?

It will always be easier to sell a piece of property that does not have tenants because of the inherent difficulties that go along with an occupied property. If tenants are living in the property it is a requirement that they be notified when the house is to be shown to a prospective buyer.

The tenants are also going to be responsible for keeping the house or other property in a condition that is appealing to buyers however they cannot be compelled to do so. This means that it can be difficult to show a house at times because of the condition that the house is left in by the tenant.

Not all buyers are looking for a rental property and therefore may not be interested in becoming landlords themselves. This means that a single family home that is for sale as a rental property may have a harder time finding a buyer because those individuals are looking for a place they can live in themselves.

The eviction process for a buyer, after a purchase, can be off-putting for some as well. On top of this, some sellers may find it find it difficult to meet the obligations to their tenants during the sale process. Having a house that is empty is easier to sell because it is able to be shown at any time.

Anyone with a rental property should know all about the rules regarding tenants and the sale of property before they decide to do so. Selling property with tenants can require a few more steps and it does have a few more rules, but it can definitely be done.

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The most important parts of the process are keeping open lines of communication with the tenants to ensure all of their rights are going to be met at every step in the process and that the sale will be communicated legally.

Renting your property out can be a good bit of business. However, there’s a lot of work involved. As the landlord, you’re responsible for maintaining the property and making any repairs as soon as they are required. If you’ve had enough of being a landlord, you may want to sell the property. However, your tenant has rights that you need to keep in consideration.

The following are four ways for dealing with your tenant if you plan on selling your property:

4 Ways To Work With Tenants

1. Give the tenant time to vacate

If your tenant is on a month-to-month lease, then you are required by law to provide the tenant with time to vacate. The amount of notice that you have to provide to your tenant varies by state.

Usually, you’ll need to give either a 30- or a 60-day notice. The easiest way to show the property is to wait until the tenant has moved out.

However, if you need to sell the property as quickly as possible, you may want to begin showing the property while the tenant is still living there. If you do this, you need to give your tenant at least 24 hours notice that you will be showing the house to potential buyers.

If your tenant is on a fixed-term lease, such as a one-year lease, then the tenant has the right to live out the remainder of the lease. The only way you can get around this is if the lease contains an early termination clause or if the tenant either failed to pay you rent or violated any of the terms of the lease, for example, keeping pets in the home if pets are explicitly forbidden.

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2. Sell your property to an investor

If you can’t wait for your tenant to move out because he or she still has a lengthy period of time left on their lease and they’ve done nothing to violate the terms of the lease, you may want to consider selling the property to a real estate investor. There may be buyers out there that are looking to invest in real estate in order to rent out and will be more than happy to purchase property that’s already occupied by a tenant. Of course, trying to sell to an investor like this is going to be somewhat challenging since you will be limited in the number of buyers that will be interested.

3. Sell your property to the tenant

When you decide to sell your property, you’ll need to inform the tenant since they will need time to vacate. If they have a long time left on their lease, you can ask them if they are willing to leave early. If they do not want to leave the house, you could offer to sell the property to them. A tenant that has lived in your house for a while may strongly consider this.

If they are unable to obtain a mortgage in order to purchase your property but are interested in doing so, you could act as both seller and lender by arranging for the tenant to make payments toward the purchase of the house.

4. Provide an incentive for the tenant to leave

If the tenant has no interest in buying your property or leaving early, then you can try to provide them with an incentive to leave early. For example, you could offer to reduce rent if they agree to move out within a certain period of time. Or you could even offer to pay the tenant to leave. There are a few ways that you can do this.

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Look to see what rent is at other similar properties in your area. If rent is higher than what you’ve been charging, offer to pay the difference multiplied by the number of months left on your tenant’s lease, so that they don’t end up losing money moving into a new apartment. You could also offer to pay for their moving costs or even offer to pay the down payment on a different rental property.

Selling your property becomes a much more challenging task if you are currently renting it out to a tenant. These are a few ways that you can figure out a way to sell the property without violating the rights of your tenant.

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Lori Ballen, REALTOR®

Lori Ballen, Realtor

Hi! I’m Lori Ballen REALTOR®. My team serves the Greater Las Vegas area from Summerlin to Boulder City, and everything in between. You can reach us at 702-604-7739.

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