How to sell a tenanted property

Most property buyers are comfortable with negotiating and buying a property that is occupied by the owner. Many will be happy to learn that the property that they desire to buy is vacant and possession can be taken at any time after closing. The fact is that most properties in the market for sale are tenanted and understanding how to handle such situations could be invaluable. Some of the issues that may arise or be a source of concern to the landlord or his agent are the status of the tenant? How do you carry out repairs or arrange inspection with a sitting in tenant? At what stage is it appropriate to give the tenant a notice of your intention to sell. And most importantly, how do you arrange for the buyer to have a vacant possession of the property? What do you do with rents already collected from the tenant? Is your right to sell restricted by the fact that you have a tenant in your property? These and other questions are common when a property that is tenanted is for sale. It is important you note that each situation will depend on the position of the law, best practices and common sense. The law protects the interest of the tenant as well as yours, and how you handle this side of things could make or mar the entire transaction. If there is a tenancy agreement in place between you and your tenant, you must respect the terms of the agreement. If the tenancy is for a fixed term, the tenant has legal right to stay in the property until the expiration of the term, except both of you agree otherwise. It is not enough for you to be willing to pay the unused rent paid by the tenant. It is not enough that you have informed the tenant that you are going to sell the property. Even in situations where there is no written tenancy agreement, the law will assume a legal tenancy is in place and expect you or your agent to follow certain processes to recover possession based on the rental history of the tenant. These are some of the things you need to consider and discuss with your lawyer before you renew the tenancy of a tenant living in a property that you intend to sell. Another issue that you need to accommodate in your plan is that of being upfront by communicating with the tenant. Technically, you can sell your property to any willing buyer without informing the tenant, except you have an agreement or understanding that requires that you give the tenant the right of first refusal. However, since most intended sale involves appraising the property, multiple inspections by different people, advertisement and other things, like taking pictures of the property discussing with the tenant, are the proper things for you to do. In some cases, providing the tenant with the information that you are planning to sell the property could provide you with a ready buyer or someone that will aid your plan by helping you to market the property, answer enquiries and allow internal inspections with the minimal required notice. There is nothing wrong with a discussion on the remaining term on the property and the extent of notice you are prepared to give once you find a ready buyer. It is sometimes strategic to stop the collection of rent and not renew tenancy if the tenancy term was about to lapse. Treating the tenant humanely is in your best interest since you do not want a litigation with the tenant that could jeopardise your plan to sell. To create a positive atmosphere around the process, you can provide the tenant with some incentives. If there is a fixed term you can also offer the tenant the opportunity to break the lease early and get a refund for the unused term. You can also agree with the tenant to have two or three months rent free to find another property. Offering to act as a referee to the tenant in his search for another property will help the tenant secure a new property faster. Considering the challenges many tenants face or the issues they have to deal with when moving from one property to another, your offer to support in any of the above or other ways should enable you to make the tenant your ally in the sale process.]]>