Can I Sell My House to Another Landlord While There Is a Tenant Occupying the Home?
Deciding whether to keep your rental home occupied or vacate it before selling is an important question to ask yourself before putting the home on the market. There are advantages and disadvantages to each course of action. In some instances, laws intended to protect tenants won't give you a choice -- they prevent you from ordering tenants to leave just to sell the house. But in all cities and states, you are able to both show and sell the house with tenants still in occupancy.
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Advantages
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The advantages to showing and selling your rental house while it is tenant-occupied are numerous. You continue to get rent, which pays for all or most of the property's carrying cost. This allows you to wait as long as it takes to get the price you want. In some parts of the country, a vacant house is a target for a break-in either by vagrants or criminals ready to steal copper wire and pipe. Your tenants are the best deterrent just by living there. Some buyers will appreciate having tenants that come with the property. It will save them downtime once they take over.
Disadvantages
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Selling with tenants, however, has some downsides. If the tenants are extremely messy, it may reflect poorly on the condition of the house and drive the price down. The prospective landlord-buyer may be turned off by the manner in which the tenants have kept the house. If the tenants have a spotty payment history or own a pit bull, the buyer may turn away from the deal or make a lowball offer. The existing lease might include rent or other terms that the buyer doesn't like.
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Geography
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In some parts of the country, specifically New Jersey, New Hampshire, the District of Columbia and a number of cities, especially in California, you cannot evict a tenant without just cause, such as nonpayment of rent. In these places, if the prospective buyer does not like something about the existing tenant or lease, the disadvantages of selling the home while it is occupied are amplified. The seller may not be able to evict the tenants but could choose to hold the property until the tenants voluntarily vacate the property or until the landlord has the opportunity to improve the lease terms in order to get a better price.
Notice Requirements
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While every state allows landlords to show and sell occupied rental property, many states and some cities have notice requirements for showing the property. The states that require notice generally require either 24 or 48 hours notice. Some cities with rent control require more notice and specify how the notice is to be delivered. In some places, showings must be scheduled for regular business hours.
Other Issues
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When selling an occupied rental home, make sure to provide the existing lease to the prospective buyer before the offer is made or, at the latest, during the contingency period. Remember to transfer any deposit the tenant has made to the buyer and to notify the tenants about the sale so they will know who to contact once the transaction has taken place.
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References
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