Can you sell a property while tenants are living there?

Many property owners have found that being a landlord can be a welcome source of supplementary income. Perhaps you’ve purchased a rental property as an investment, or have decided to rent out your former home after moving. Some homeowners live in one part of a property and find tenants for another part, such as an in-law apartment or half of a duplex.

While this rental income can help you pay off a mortgage, it can also complicate matters if you decide to sell the property. A sale might force tenants to move elsewhere, which can be especially vexing to them if they have been paying their rent and abiding by your rules.

Landlords have the right to sell their property, even if it is currently rented out. However, it is best to try to help any tenants with the transition, especially if they’ll need to relocate.

When to sell

One option for landlords is to wait for the lease to expire. You can then inform the tenant that you do not wish to renew the lease and that they will need to find a new residence.

Proper notice is required when taking this route. State law requires that a landlord only needs to give a tenant three days’ notice before the expiration of the lease, but it is better to try to give them as much time as possible. Cathie Ericson, writing for the National Association of Realtors, says many states require landlords to give tenants a 30-day notice to vacate.

The lease you drew up with your tenant may give you the option of terminating the lease in the event of a sale of the property. If this clause is not included, the tenant will be able to stay in the property until the expiration of the lease, even if you find a buyer before that time.

Tenants may not feel too motivated to help you sell your property if they’ll be forced to move out, so the main benefit of terminating a lease is the ability to prepare the property for showing. Brendon Desimone, writing for the real estate site Zillow, says you’ll be able to clean the residence, put on a new coat of paint, or make any other upgrades you deem necessary before putting the home on the market.

Unfortunately, this will also delay when you are able to list the property. And during that time, you won’t collect any of the income you would have received if a tenant was paying rent. A residence occupied by a tenant can also help increase the appeal of a property, since it shows how the space can be used.


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