Tips for selling a tenant-occupied property
Homeowners have to go through a maze of formalities to sell a home. The process is quite daunting, but when you are trying to sell a tenant-occupied property, the complexities increase significantly.
Apart from following basic obligations to avoid common home-selling pitfalls, you will also need to consider some specific challenges that come with selling a tenant-occupied property.
Here are a few things that you need to keep in mind:
Tenants have rights
The last thing you want is to land on the wrong side of the law. Your first step should be to familiarize yourself with the property management and tenant rights laws in your area, if you aren’t already. Go through the lease carefully and and know the options available to you when selling.
- If you have a month-to-month rental agreement, all you need to do is serve your tenant(s) with a notice requiring them to vacate the premises. Your lease should have specified a notice period, meaning that you need to send a letter a specific number of days prior to the date of tenancy’s termination.
- If you have a fixed lease, you can wait until the lease expires and the tenant moves out. However you should consider pros and cons of waiting for the tenant to move out before taking a decision in this regard. If you are in a hurry due to any special circumstances, this strategy may not be a good option.
- Find out if you have any ground for terminating the lease, such as failure to pat rent or a violation of the lease terms.
- Find out if you have an early termination clause included in the lease. These clauses usually say that the lease terminates in 30/60/90 days, for example, after closing on the sale of the property.
Offer incentives to your tenant
You can help your tenant find a property in the same neighborhood and if other rentals are charging higher amount of rent, you can offer to pay the different between what the tenant was paying you and the rent of comparable rents times the amount of months left on the lease
Selling a home with an active lease
If you are unable to legally remove the tenant or you feel you can successfully sell the home while it is occupied, you can put the property on the market with an active lease. In this situation, you will notify the tenant ahead of time when you show the house. Many regular home buyers will be skeptical about purchasing a tenant-occupied property. As a result, your options may become more limited. If you can’t sell to a regular buyer, you can easily find a real estate investor. It’s important that the new owner honors the tenant’s lease.
In conclusion
Selling a tenant-occupied property can be a challenge, but if you follow the strategies mentioned in this article, you will most likely find a situation that works for you.