How & When To Tell Tenants I'm Selling and Not Renewing Lease

Question

Hi all!

I'm seriously considering selling my rental property, which used to be a townhouse we lived in. My question is, when do I tell the tenants I won't be renewing their lease and will be selling the property? Should I give them a chance to try to buy it if they can qualify for a mortgage?

History on the tenants. They have lived in my property for over 2.5 years and haven't caused any problems so far. They aren't the best at communicating, but no major problems have popped up. They are pretty ideal tenants and I get the rent on time or close to it every month, I just found out I worry too much about my property and want to sell while the market is hot in my area. I'm just not cut out for landlording at this point in my life even with awesome tenants.

Thanks for any and all help!

Samuel Sedore · Answer

The sooner the better from my experience as a realtor if the sign hits the ground the same week you tell them they will feel betrayed and violated. If the property doesn't sell you have to deal with angry tenants. Make them feel as though they have a say in the water even though they don't, use phrases like if you don't mind and would you be offended.

I.e Would you be offended if I had people through to view the property starting next month as I'am considering putting it on the market.

Mike Wood · Answer

@Lance Cothern I am not sure what the terms of your lease state, but if you both want to end it early, there should be no issues with that.  If you give your tenants more than the 30 day notice required by most leases, than they may find another place to live sooner, and you would just be letting them out of their lease early with no penalties (assuming it is not a month to month lease, which which does not really have a term).  I would ask them to give me some warning if they plan on moving out early (dont want to get a call saying they moved out yesterday).

If they move out early, you get to sell the property faster. I think its a win-win.  They tenant just needs to know the absolute move out date that you set.

I personally think the fact that you will give them 3 months is a great thing that most tenants will like.  30 days is quite fast to find a place for a tenant if they are not expecting it.

Mike Wood · Answer

@Lance Cothern I would tell them ASAP.  Since they have been good tenants, I would give them as much time as possible about not renewing the lease.  Let them know that you are selling, and if they ask, tell them what the price is. I would do this before getting a Realtor involved, as it will save the commissions.  In all likelyhood, they will not be your buyers.

I personally hate occupied properties for sale.  I never show occupied units to new tenants, and each time I walk thru an occupied unit that I am considering buying, it turns me off and any offer I would put on the property is now lower in my head.  I only show unoccupied units.  This will appeal to them most buyers, as some owner occupants will not want to look at a property that is tenant occupied.  Your local realtor can help you with this, and maybe your area is different from mine in the regard.

With the place vacant, you can make any smaller repairs, touchups, cleanups and get the place fresh and clean for it to go up for sale.  Good luck.

John Van Uytven · Answer

@Lance Cothern

I tell them you are looking to sell and would ask them if they want to buy it first.

If so then great.

If not, are you going to sell to an owner occupier or another investor?

Another investor would want the tenants to stay (probably)

Account Closed · Answer

Hi everyone!  I came across this post as I am considering selling my property.  Even thought I am thankful to have had the experience my heart is not fully into being a landlord.  My property currently has tenants that do not pay on time.  Their lease will expire 31 Sept.  I sent a notice of non lease renewal certified that they should receive by today.  Is there anything else I need to do with reference to non lease renewal?  I also verbally informed the tenants of my desire to sell and they showed some interest but wanted to know how much.  I will also mail a notice so that I am abiding by Maryland Law as a Landlord.  I am not interested in making a profit but am only interested in being done with the responsibility of owning a home at the cheapest route possible.  Currently, I am not willing to consider a short sale.  So far I have called the mortgage company to request the payoff amount so I would know how much to tell the tenants I am willing to sell the house for.  I want to make sure that I give the number to them that will allow me to incur as less costs out of pocket as possible.  I found a sample of an intent to sell letter, but no samples on how to word an offer to buy letter.  Can anyone help me with this?  Please let me know if I am missing any steps as to make this process more efficient.  I would appreciate any advice as well.

Also, selling my home to the renters is not the last resort.  If my finances allow for the costs a seller incurs when selling a home, i will market it and sell.  If not I will find new, hopefully more dependable renters.  The last resort is to move back into the home until other decent options present themselves to me.

Jeff B. · Answer

Going thu this myself.  Notice of Intent to Sell will be delivered same day as the appraiser & I walk thru.

Notice includes comment that the existing leases will still be enforce at COE

(as the buyer wants the turnkey, 100% occupancy).

Lance Cothern · Answer

Thanks @Mike Wood! I have a trusted realtor that I plan on using and I'm definitely going to wait until the tenants move out before putting the house on the market. It does need some minor repairs that can be done after they move out.

The lease would end at the end of June, so I'm thinking the earliest I would tell them would be 3 months out. I'm just worried about the potential of them being upset I'm not renewing their lease again. I doubt they'd be a problem, but sometimes I know people can shock you. If they find another place earlier than the end of the lease, is there any legal problem with me letting them move out early despite the lease, if I wanted to get it on the market faster?

Lance Cothern · Answer

Thanks for the reply John. My best guess is it will either be sold to an owner occupier or a second/vacation home owner. I wouldn't be opposed to selling it to an investor, but not sure who would end up buying. It's 3 blocks from the beach in Panama City Beach, so that's why I'm thinking probably a second home.

How & When To Tell Tenants I'm Selling and Not Renewing Lease

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