I'm selling, tenant wants to stay longer. What do I do?

Question

We have a investment property in Austin. The current tenant has been there for 2-1/2 years. We had told the current tenant last year that we intend to sell the property and had offered it to them at a discount. They said they needed to fix their credit but they also wanted a bigger home.

Prior to the lease ending, they said they wanted to stay another 3 months. We gave them a verbal approval and sent them the 3 month lease to sign. They did not respond for three weeks and in the middle of May, they asked to meet for the signatures. By this time my wife and I noticed that the economic conditions had changed and the CMAs were a lot higher then we had anticipated. We confirmed with a realtor.

Well the lease is up on May 31st and we allowed them to go month-to-month with the lease ending on June 30th. We are placing the home on the market on June 2nd.

The tenant has been approved to buy a home. This is great news, I thought. Now the request from the tenant is to stay until August 10th because that is when their new home will be ready.

I want to sell it as soon as possible. What are some options?

Greg H. · Answer

I would send notice rescinding both the offer to discount the price(Could be interpreted as an option ) and the 3 month extension of the lease(It is not valid until signed by the tenant and delivered back to you). The lease would then continue as month to month unless your lease has language to the contrary

Summertime is usually the best time to sell and I would want the most flexibility  as a seller. Explain to the tenant that once a buyer is secured you will be issueing a 30 day notice. Feel free to reach out if you need any help

Linda Osborn · Answer

I would send them an official "NOTICE OF LANDLORD'S INTENT NOT TO RENEW". This is a TAR from you should be able to get from your realtor. It is the "official giving notice to a tenant" form used in Texas. You want to get it to them before the end of May, though, if you want them out by the end of June.

Victor Noriega · Answer

thanks for all the quick feedback. I will send a notice to rescind the verbal 3month term and the offer to sell. Our realtor walked the home and only recommended minor touch ups. Mostly landscaping and replacing an old ceiling fan in the patio.

I did think about the days it will take to close. In the area DOM are 3-10 days. So with a traditional buyer the tenants would have 50 days at the most. A cash buyer may allow them to stay. But the risk is on the tenant. I will let them know that I will not renew beyond June 30th. That way they can plan for temporary housing while their home is ready. It is the best option. Because if they are getting a home built, the builder could be exaggerating the completion date.

Robert Melcher · Answer

Unless you get a cash buyer, you will be closing about 40 days out from contract.

Most bank financing is averaging 40 days.

I would list with the understanding that the house will be available with 45 days notice.

Then you tell the tenant you will give 30 days notice since she is month to month, as soon as you have a contract.  Be sure you are in agreement regarding showings and such before you list for sale.

Michael Boyer · Answer

When I sell a rental, I like to bring it from rental condition to pristine, like new condition (paint, floors, etc)...Just did one and have it for sale now.. So that would have been very challenging with an occupied unit if you plan to do that, but perhaps your market is so hot, that fix up may not be required. That depends on your plans. Plus, it sounds like they are taking up the hot (for sales and temp!) summer months...

And you probably don't want to list it occupied with a tenant...if possible..(but looks like you would for first month)...so back to your situation, which is not clean, but check your state rules and verify without the signed lease, you reverted to the month to month, so I would really document and communicate the end of June move out date (like verbal plus a follow up more formal looking letter) and prepare for the move out then and the painters, etc to come in.. Also, explaining all the sale prep, your schedule, and how they need to be vacated may help as will a mention of the deposit return (for an empty intact property by the specified date)..If you sense resistance or an issue or have a question, you could get legal advice. Best of luck..

I'm selling, tenant wants to stay longer. What do I do?

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