Tips for Selling a Property With Existing Tenants

Property with existing tenants can be more complicated. You need to advertise and show the property while respecting your tenants’ rights and needs.

In this article, ourvillas will explain what happens when you sell a property and give you five tips.

What Is a “Property With Existing Tenants”?

A “property with existing tenants” refers to a rental property that currently has tenants living in it. This means the property is already occupied, and the tenants have an active lease agreement. If the property is sold, the new owner inherits the existing lease and must honour its terms until it expires or is renegotiated.

Can You Sell a Rental Property With Tenants?

Yes, you can sell a property with existing tenants living there, as long as you follow the lease agreement and respect your tenant’s rights. You need to handle the sale fairly for your tenants. Before you decide, consider these pros and cons.

Pros of Selling a Tenant-Occupied Property

• A property is appealing to investors because they won’t need to find new tenants or wait to start earning rent.
• The property is furnished and lived in, helping potential buyers see its potential.

Cons of Selling a Tenant-Occupied Property

• Tenants may not like the idea of a new landlord, making it harder to schedule showings.
• If you haven’t inspected the property recently, it might not be in great shape, making it less attractive to buyers.

What Happens to an Existing Lease When the Property Is Sold?

When you sell a property, the lease transfers to the new owner. The lease terms, including rent and duration, stay the same unless the new owner and tenants agree to changes. The new owner must follow the existing lease and can’t ask the tenant to leave or raise the rent until the lease is up for renewal.

If tenants choose to move out, you can change the lease end date with a lease amendment. This legal document modifies the lease terms. You’ll need the tenant’s name, effective date, the part of the lease being changed, and signatures from all parties. Once signed by everyone, the amendment is legally binding.

How to Sell an Occupied Rental Property?

If you’re selling a property with existing tenants, here are some tips to make the process smoother.

Be Transparent With the Buyer

• Clearly state in your listing that the property has tenants.
• Share details of the lease agreements and management processes with potential buyers to ensure a smooth transition with property with existing tenants.

Communicate With Your Tenants

• Inform your tenants about your plan to sell the property as early as possible.
• Let them know what to expect and keep them updated throughout the process.
• Once the property is with existing tenants, the new owners can introduce themselves and share contact information with the tenants.

Make Showing Times Convenient

• Give the property with existing tenants at least 24 hours’ notice before showings, or more if required by local laws.
• Be considerate of your tenant’s schedule to avoid inconvenience.
• Ensure the Property Is in Good Condition
• Address any maintenance issues and repair damages to make the property appealing to buyers.
• Consider hiring professional services for tasks like landscaping and cleaning.
• Ensure There Are No Lease Violations
• Resolve any lease violations and collect overdue rent before finalising the sale.

Where to List a Rental Property With Existing Tenants for Sale?

When you’re ready to list your property, use a real estate listing site like Realtor.com®. Include important details like property type, features, and history. Realtor.com® also offers tools like Seller’s Marketplace to help you sell without listing, and UpNest to find a real estate agent. Once the property with existing tenants, the new owner can post a rental listing on Realtor.com® to find new tenants.

Frequently Asked Questions