Tips For Selling A Tenant-Occupied Property
Posted on Oct 06, 2017
When you want to sell a unit while it’s occupied by a tenant, relations can turn rocky. Below, learn how to approach a situation when a landlord wants to sell so you get the outcome you want while respecting your tenants’ rights.
What You Need to Know When Putting Up a Tenant-Occupied Property for Sale
While you have the right as a landlord to put up your investment property for sale, you’ll need to respect the tenant’s rights during the lease term.
Tenants have right to quiet enjoyment of the unit. Typically, this means that you, as a landlord, cannot enter their apartment without giving sufficient notice, usually 24 hours’ notice. The same consideration applies to rental showings.
Disturbance of the tenants’ quiet enjoyment cannot be “excessive” by law. While courts have argued over what excessive means, it’s generally safe to show the apartment keeping in mind the normal amount of showings in your area. This might mean four to five individual showings a month, or an open house every weekend. Your real estate agent can walk you through what’s typical for your area.
Note that “excessive” use varies by the renter’s life circumstances. Someone with a baby, who does not work business hours, may be disturbed by frequent showings during the week; whereas someone who is working from 9-5 might not be bothered by daily showings.
Tips for Selling Investment Property With Renters
Tenants can cite a landlord selling their house/apartment without giving them consideration as a reason to break their property lease. If you are relying on rental income to cover your expenses while you show the property, it’s in your best interest to respect the renter’s right of occupancy. If the tenant leaves, you have to cover the mortgage on an unoccupied unit you’re trying to sell without the safety net of rental income. It’s highly unlikely that a renter would want to move into a unit knowing the landlord wants to sell.
In some cases, your existing tenants may be interested in purchasing the property from you. This could be a win-win, provided the tenants are willing and able to pay fair market value for the property.
Since you’ll need to disclose to tenants that you’re selling the unit, you might want to offer them first right of refusal. If they agree to buy it, you’ll keep more money since you won’t have a real estate agent taking commission. The worst-case scenario is, they will turn down your offer and you’ll put the unit on the market.
For more help with selling an investment property, such as calculating a gain on the sale of rental property, join American Apartment Owners Association. As a member of American Apartment Owners Association, you’ll enjoy updated advice for landlords, discounts on products and services, and other benefits.