The paths of a property owner and tenant rarely diverge at the perfect time for both parties. Therefore, we’re asked time and time again about the ins and outs of selling rental properties that are still tenant-occupied. While each scenario is its own animal, we can say with certainty that, in Los Angeles, it’s perfectly legal to sell a home you own, even if tenants are currently residing in it. But it takes some careful thought and planning. If you’re curious about how to sell your house, even though it’s tenant-occupied, read on for answers that will, at the very least, get you started on the right foot.
(1.) Stay On the Legal Side of Tenant Rights
A firm grasp on tenant rights is essential when determining how to sell a house where renters continue to reside. Keep in mind, this process doesn’t need to feel like war. It’s absolutely possible to execute a sale that leaves you and your (former) tenants smiling. Take a scrutinizing look at the lease agreement your tenants signed and compare the terms with your city’s local laws regarding landlord-tenant relations. These vary depending on your state, but in most cases, a tenant’s rights remain intact regardless of whether you’re selling the property.
However, lease type can speak volumes about the best path forward.
- Fixed-term leases – Under a fixed-term lease, a buyer is obligated to maintain the terms of the initial lease until its date of expiration. However, the tenant can opt to leave early of their own accord.
- Month-to-month leases – If the terms are month-to-month, a written notice to vacate must be provided to the tenant. In California, the leniency in the duration of the order to vacate is dictated by the period of tenancy. If the tenant has lived in the home for less than a year, a 30-day notice is required. If they’ve lived in the home for over a year, a 60-day notice is necessary.
To ensure you’re staying compliant, it’s advisable to talk with both a licensed real estate agent and a real estate-focused attorney when strategizing how to sell your house when tenants are still involved.
(2.) Keep Communication Clear, Respectful, and Empathetic
It’s important to remember that your tenants aren’t simply obstacles standing between you and a sale. Therefore, it’s integral to keep communication clear and respectful when determining how to sell your house. For example, don’t let a “For Sale” sign on the front lawn or property tour with a prospective buyer be your way of breaking the news to your tenants. Rather, set up an appointment to speak to them about your decision. Assure them that you will respect their legal rights. If this makes you uncomfortable, bring your attorney along.
It’s natural for your tenants to worry when you announce your plans to sell your property. But by addressing their concerns from the outset with clear, respectful language, you can avoid misunderstandings and even foster a more cooperative response.
(3.) Incentivize Tenant Cooperation
However, expecting tenant cooperation could also set you up for disappointment. Therefore, when considering how to sell your house, you may want to weave in a few incentives for your tenants to ensure a smooth path forward. Mull over enticements such as:
- Reduced rent during the showing period.
- Early vacating rewards and financial incentives.
- Relocation cost coverage.
- Favorable rental references.
Of course, incentivizing your tenants is purely optional. But owners who positively motivate their tenants to cooperate tend to find cleaner properties, easier scheduling for walkthroughs, and a generally easier path to a sale.
(4.) Get the Timing Right
When planning how to sell your house, you hold a lot of control in timing the sale. Therefore, you may wish to align your timing with the end of your tenant’s lease term to add that extra degree of simplicity. This strategy isn’t just helpful to the tenant. It expands your buyer pool, opening it up to prospective owner-occupants and investors who may not want an already-active lease attached to their new property. If you’re not getting the attention of investors willing to take on active tenants, this technique could give you your best return.
Don’t Act Alone When Planning How to Sell Your House with Active Tenants
When determining how to sell your home with tenants still attached, you should expect a careful balancing act of legal obligation, marketing strategy, and empathy for your tenants’ perspectives. But you can make the process easier by hiring a knowledgeable real estate agent and real estate-focused attorney to ensure your every step forward is well placed!
Contributor, designer & admin for JohnHart Gazette.
