There are plenty of reasons a landlord might want to sell a rental property. Perhaps it is to cash out the equity value. Maybe the work of keeping up a rental property isn’t a good choice anymore, due to health or the need to relocate. Maybe the landlord inherited the property and has no desire to keep it.
When a rental property is occupied by a tenant, there are rules that have to be followed, and tenants rights have to be respected. These vary by state, so it is important to check out the laws in your specific location.
There are two types of leases – a month to month lease, or a fixed lease, usually for a term of a year or more.
With a month to month lease you need to give the tenant a thirty day notice in writing, or whatever term is required by your state. There is no need for cause, it’s called a no cause termination. If you have a good relationship with this tenant, you may give them some leeway, but the bottom line is that you are selling the property and their tenancy will not survive the sale. They have to leave.
With a fixed term lease, it’s very different. Unless there is an early termination clause in the lease stating that the lease expires within a certain amount of time after the sale of the property, tenants general can live there until the current lease expires. There are some exceptions to this. If a tenant has violated the terms of the lease by not paying rent, destroying property, subleasing without permission, or violating a no pet clause, then the landlord has cause to terminate the lease with proper notice.
Tenants are entitled to a right of privacy and enjoyment. It may be necessary to show the property to a prospective buyer. This has to be done in consideration of the tenant and their right to privacy. Realtors and property managers must work with the tenant to show the property. Generally oral notice is sufficient, and as much advance notice as possible. Some tenants will specify certain hours when the property cannot be shown or set a schedule with the realtor.
Another option for selling your rental is to pay the tenant to leave, a cash for keys agreement. This can be an effective way of getting rid of a bad tenant in a hurry. Your offer should be what you can afford. Sometimes landlords offer to pay the moving costs or first month’s security in the tenant’s new home.
Finally – you can sell your property to your tenant. Be sure to read our article on Rent to Own here.