The time has come for you to sell your rental property. If a tenant occupies your property, there are ways to help you make it through the selling process without breaking the law. While it is your residence, you should keep your tenant’s best interests in mind during the sale process. As a responsible landlord, it’s imperative for you to show your tenants some respect. If you fail to do so, you could end up having an angry tenant on your hands and potential legal troubles. Let’s take a closer look at some steps you should take when selling an occupied rental property.
Dealing with Month-to-Month Rental Agreements
If your tenant signed a month-to-month rental agreement, the law requires you to give your tenant proper notice about a sale. You must mail or hand-deliver a letter 30 days prior to the date you would like for them to vacate the premises. Please keep in mind that the required notice period varies from state to state. Because you generally do not need a reason to cancel a month-to-month rental agreement, many landlords prefer using month-to-month rental agreements over fixed.
Dealing with Fixed Term Rental Agreements
Dealing with fixed-term leasing agreements require a little more finesse. They typically don’t end when the property is sold to a new owner. Here are five ways of handling fixed-term rental agreements properly:
Sell the Property to Your Tenant
There’s a possibility that your tenant may be interested in buying your property. Your tenant can get their own financing or you can offer seller financing. With seller financing, you are the lender and your tenant makes monthly payments to you. It’s important to mention that you must get permission from your lender if your property is not free and clear.
Wait Until the Lease Agreement Expires
If you have a good tenant, you can allow them to stay until the lease expires. This is probably the easiest option on the table. However, you can terminate the lease if they have violated any terms in the agreement.
Exercise the Early Termination Clause
Do you have an early termination clause listed within the agreement? If so, you can exercise it.
Pay Your Tenant to Move
If there are several months left on the lease, you could work out a deal with your tenant. You could offer to cover their moving expenses, pay their deposit on a new property, or give them money as a settlement.
Sell the Property with an Active Lease
You can sell your property, but your buyer must honor the existing rental agreement. This option can pose a challenge because some investors won’t be interested in buying a property that comes with an existing tenant.