Home Seller 101: Can I Sell a House That Still Has Renters?

Disclaimer: Beachworks LLC is a real estate investment company in Seattle. The following article is meant to be informational only and is not meant to be taken as legal advice. If you require legal advice, we strongly suggest you contact a real estate attorney.

Have you decided you don’t want to be landlord anymore? Are market values up significantly from the time you bought the property? If so, you might be wanting to sell a house you own that still has renters. There’s just one question— can you? And what are your options?

The most obvious option is that you’ll have to wait until the current tenant’s lease ends. Then you can put the house up for sale and market the property more easily. Perhaps you don’t want to wait though. Maybe you’re anticipating that the market will shift, or maybe you need to sell the property for financial reasons. No matter what your reasoning is, the good news is that you can sell a property while tenants are still living in it. Here’s what you need to know.

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Review the Lease

The first step in selling your rental property is to review your lease terms. Fixed-term leases are different than month-to-month. It will be much easier to end a month-to-month lease rather than a fixed-term lease. There can be clauses that prevent you from showing or selling the property while still in the lease term. Seek the help of a landlord/tenant lawyer to understand all the situations that may apply to you.

Honoring the Lease

If your current fixed lease tenants cannot be swayed to move out early, you—and the new owner, if you sell before the lease ends—will have to honor the lease agreement. The lease gives your tenants the legal right to your property until a specific date and time. It’s possible that you may find another investor who will want to continue leasing to your current tenant. Or, a buyer may want to move into the home themselves.

Depending on what the new owner’s plans are, you may be able to strike up a deal with your tenants. Offering money—sometimes referred to as “cash for keys”—can incentivize a tenant to move elsewhere. In that case, the tenant can agree to shorten their lease agreement and move out early, freeing you up to sell the property sooner.

Related Article: Can I Sell My House If I’m Behind On Mortgage Payments?

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Giving Notice

Washington state recently reformed their renter right and eviction laws. If you plan to end a current tenant’s lease, it’s important to follow the prescribed rules so you don’t find yourself in a legal battle. According to Seattle law SMC 22.206.160(C)(1)(f), landlords must give current tenants 90 days written notice if they plan to sell the property.

This gives your tenant adequate time to find a new place to live and make plans to move. Giving more notice is always advisable and will help to ensure a smooth working relationship as you prepare for the sale.

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Marketing the Property

It’s no secret that deciding to sell a property that is currently occupied by tenants is a bit trickier than selling a vacant home. First of all, limiting the showing of the home to appointments only will likely reduce the amount of people looking at it. You also have to make sure the tenant keeps the main areas show ready, and work with them to schedule showings and open houses. Even with plenty of notice, you can end up with a disgruntled tenant, as renters are not always happy to hear that their owner has decided to discontinue their lease and sell the property.

With that said, there are steps you can take to make it easier for them to handle this situation. Offering to hire a cleaning service once a week to help your tenant keep the place spotless is a good starting point. Set expectations for showing times and open houses up front and try not to deviate from that plan. If possible, help your tenants find a new place to live that is similar in amenities and price.

Related Article: 5 Important Questions a Seller Should Ask an Off-Market Buyer

Selling a house while your tenants are still living in it can be an invasive experience for them, so it’s important to keep things professional and respectful. All the above actions will go a long way towards forging a good relationship with your tenants now and in the future.