Property owners used to hold on to their house or apartment complex indefinitely. That’s not the case with real estate owners anymore, though. They often trade up to better places or move into different markets, leaving them needing to sell their properties.
Tenancies don’t always align with the sale of a property. You may wonder what to do with your existing tenants if you sell your rental to another investor or an owner-occupant. You have a few different options.
What to do with your tenants if you sell to another investor
Another investor may see it as a strong selling point if you already have a tenant who pays monthly rent already living in the unit they’re looking to buy. On the flip side of the coin, they may see it as a disadvantage as it may affect the prospective buyer’s ability to see the home. They may also not feel comfortable with the rental fee or terms of your contract.
You may find yourself needing to terminate your tenant’s lease early if your prospective buyer is uninterested in honoring your existing contract.
What to do with a tenant when you’re planning to sell to an owner-occupant
There are some instances in which you may find a prospective buyer who wants to move into the unit you’re offering for sale. Potential issues may arise if your tenant has significant time left on their lease.
You may see if your prospective buyer wants to move forward with the purchase, only moving in once your tenant’s lease expires. If they’re uninterested in doing that, then you may also need to go ahead and review your tenant’s contract to see what the terms are for early termination of their lease.
Handling sticky tenant issues upon the sale of your unit
While you own a property and may feel like you can do whatever you please with it, that’s not necessarily the case if you have a tenant living there. Existing laws limit your rights to your property during their tenancy. You’re also bound by the contract with the tenant you entered into with them. There are penalties for violating it.
An attorney will want to go over what the rental contract says before advising you of your options for ending your renter’s tenancy.