Can You Sell an Occupied House with Tenants?

Selling a rental property can be a complex process for Buffalo, NY investors, but it can be even more challenging when there are tenants living in the property. As a landlord, you have the responsibility to ensure that your tenants’ rights are protected while also trying to sell your property. Remember, while it is your property, it is also someone’s home. If you’ve never sold an occupied house with tenants before, we’ve detailed below how to notify your tenants, prepare your property for sale, and close the deal. 

How To Sell an Occupied House with Tenants

Selling a house with tenants can be a challenging process. It requires careful planning, communication, and cooperation to ensure that the rights of both the landlord and the tenants are protected. 

Notify Your Tenants

The first step in selling a rental property with tenants is to notify them of your intention to sell the property. This means providing a written notice to your tenants that includes the date you plan to list the property for sale and the date you plan to show the property to potential buyers. In most states, this notice must be delivered 24 hours in advance.

It’s essential to be transparent and open with your tenants throughout the selling process. You must inform them of any changes or developments as they occur, such as new offers or a closing date. Keeping your tenants informed can help alleviate their concerns and make the process go more smoothly.

Prepare Your Property for Sale

Once you have notified your tenants, it’s time to start preparing your property for sale. This can include cleaning, repairs, and staging your property. You want to ensure that your property is presented in the best possible light to potential buyers.

If your tenants are still living in the property, it’s vital to respect their privacy and their living space. You should work with them to schedule times for cleaning, repairs, and staging that work for their schedules. You should also be mindful of any changes that may impact their living arrangements, such as scheduling showings during their work hours or interrupting their daily routines.

Work with Your Tenants

When selling a rental property with tenants, it’s crucial to work with them throughout the process. This means being flexible and accommodating when necessary. For example, if your tenants are not comfortable with strangers coming into their homes, you may need to limit the number of showings or schedule them at times when your tenants are not at home.

You should also be prepared to answer any questions or concerns your tenants may have about the selling process. They may be worried about their security deposit, the terms of their lease, or their future housing arrangements. It’s important to address these concerns promptly and honestly to maintain a good relationship with your tenants.

Different Types of Leases

If you’re a landlord looking to sell your occupied rental property in Buffalo, NY, you have a few options available to you depending on the type of lease your tenants are holding. 

Tenants with Fixed Term-Leases

A fixed-term lease is a lease agreement that has a specific end date, usually six months or a year from the start of the lease. If you’re a landlord with tenants on a fixed-term lease, you have two options when it comes to selling your property.

1. Wait Until the Lease is Up to Sell

One option is to wait until the lease is up to sell the property. This is the simplest and most straightforward option, as it allows you to sell the property without disrupting your tenants’ lives. You’ll also need to make sure that you’re following the terms of your lease agreement, which may have specific provisions regarding the sale of the property.

2. List with Tenants in Place

Another option is to list the property with tenants in place. This can be a more challenging option, as it requires you to work with your tenants to ensure that the property is presentable and that showings are scheduled at convenient times. However, it can also be a more attractive option for potential buyers, as it allows them to see the property as it is currently being used. If you choose to list the property with tenants in place, it’s important to communicate with your tenants throughout the process and to be respectful of their privacy and living space. You’ll need to give your tenants ample notice before you put the property on the market. And most states require landlords to give tenants at least 24 hours notice before showing the property to potential buyers. 

One thing to keep in mind is that if you do choose to sell the property with tenants in place, you may need to offer an incentive to your tenants to ensure their cooperation. For example, you could offer a rent reduction or a cash bonus for keeping the property clean and tidy during the selling process.

3. Sell Directly to a Cash Home Buyer

If you’re looking to sell your Buffalo, NY property quickly and don’t want to deal with the hassle of listing the property or waiting for the lease to end, you could consider selling directly to a cash home buyer. Cash home buyers are investors who specialize in buying properties quickly and can offer you a cash payment for your property. This can be an attractive option for landlords who want to sell their property quickly and don’t want to deal with the hassle of listing the property or working with tenants.

However, it’s important to keep in mind that you may not get the same price for your property when selling to a cash home buyer as you would if you listed it on the open market. Cash home buyers may pay less, but buy purchasing as-is, you can save money on commissions, repairs, and holding costs. 

Tenants with Month to Month Leases

A month-to-month lease is a lease agreement that automatically renews each month. If you’re a landlord with tenants on a month-to-month lease, you have a few options when it comes to selling your property.

1. Renegotiate

One option is to renegotiate the lease agreement with your tenants. For example, you could offer your tenants a new lease agreement with a longer term, such as six months or a year. This would give you more time to sell the property without disrupting your tenants’ lives. It would also give your tenants more security, as they would have a longer-term lease agreement.

However, it’s important to keep in mind that your tenants may not be willing to sign a new lease agreement. They may prefer the flexibility of a month-to-month lease, and forcing them to sign a longer-term lease could cause tension in your landlord-tenant relationship.

2. Terminate

Another option is to terminate the lease agreement with your tenants. This can be a more challenging option, as it requires you to give your tenants notice that you’re terminating the lease agreement. Most states require landlords to give tenants at least 30 days’ notice before terminating a month-to-month lease.

However, if you’re looking to sell the property quickly and don’t want to deal with the hassle of working with tenants, terminating the lease agreement may be your best option. Once the lease agreement is terminated, you can sell the property without worrying about disrupting your tenants’ lives or following the terms of a lease agreement.

1. Understand Your Lease Agreements

Before you start the process of selling, it’s important to review the current lease agreements with your tenants. Take note of:

• Lease Terms: Are your tenants on a fixed-term lease or a month-to-month agreement? Fixed-term leases are typically honored until the end of the lease, whereas month-to-month leases can be more flexible.
• Notice Requirements: New owners will usually have to honor the existing lease. However, in some cases, if you plan to sell with vacant possession, the tenant may need to be given proper notice (usually 30 days in Buffalo).

Make sure that any sale will comply with lease terms, and give your tenants sufficient notice if you’re planning to ask them to leave before the sale.

2. Communicate With Your Tenants

Open communication is essential. It’s respectful and legally required to inform your tenants about your plans to sell the property. This will help you build trust and minimize disruptions.

• Give Written Notice: Be sure to provide your tenants with a written notice that explains your intent to sell the property.
• Discuss Showings: Coordinate with your tenants to schedule property showings at convenient times for them. You may want to offer compensation for any inconvenience caused.
• Provide Proper Notice: In New York, landlords must provide tenants with a minimum of 24 hours’ notice before showing the property.

3. Know the Buffalo, NY Tenant Laws

Selling a property with tenants requires you to follow Buffalo’s rental laws carefully. Some key points to remember are:

• Tenant Rights: Under New York law, tenants have the right to stay in the property for the duration of their lease, even if the property is sold.
• Security Deposits: When transferring ownership, you will need to either return the tenant’s security deposit or ensure the new owner is responsible for it.
• Eviction Restrictions: If you are asking the tenant to leave before the lease ends, you must follow strict eviction laws and provide adequate notice.
• Rent Control & Stabilization: Buffalo does not have rent control, but there are rules around rent increases that may affect your tenants’ willingness to cooperate with a sale.

4. Decide Whether to Sell with Tenants or Vacant

There are two primary ways to sell your rental property:

• Sell with Tenants in Place: This is often the preferred option for investors. It allows the new owner to acquire a property with rental income already established. Selling with tenants can be appealing to investors looking for immediate cash flow.
• Sell Vacant: If you want the property to appeal to a broader market of buyers, you may choose to ask the tenants to leave (if possible). In Buffalo, this can be a complicated process, depending on the terms of the lease, and could require the assistance of an attorney if eviction is necessary.

5. Price the Property Accordingly

When pricing your property, take into account whether the property will be sold with tenants in place or vacant. Selling with tenants can sometimes lower the sale price, as potential buyers may be looking for immediate possession or may prefer not to deal with tenants. On the other hand, if you’re selling to an investor, the rental income stream could make your property more valuable.

6. Market the Property Effectively

Once you’ve prepared your property for sale, marketing it correctly is key. If your tenants are cooperative, schedule showings, create high-quality photos, and list the property online. In your marketing, you may want to highlight the rental income potential for an investor.

If your property is being sold with tenants, be sure to:

• Highlight the current rental income in your listings.
• Stress the stability of the tenants, including their payment history if possible.
• Clarify that tenants are on board with the sale and will cooperate with showings.

What do You do if Your Tenants Don’t Want to Leave?

As a Buffalo, NY landlord, you may find yourself in a situation where you want to sell your rental property, but your tenants don’t want to leave. This can be stressful, but there are options available to help homeowners in this situation.

Sell to the Tenant

One option available to you is to sell the property to your tenant. This can be a win-win situation for both you and your tenant. Your tenant may be interested in purchasing the property because they are already familiar with it and have established roots in the community. They may also be willing to pay a higher price for the property because they won’t have to move out and find a new place to live.

If your tenant is interested in purchasing the property, you should first consult with a real estate attorney to ensure that the transaction is legal and that all necessary paperwork and disclosures are completed. You should also have the property appraised to determine its value and negotiate a fair price with your tenant.

Another factor to consider is financing. If your tenant is unable to secure financing from a traditional lender, you may need to consider owner financing. This is when the seller (you) provides financing to the buyer (your tenant) instead of the buyer obtaining a loan from a bank or other financial institution.

Selling to your tenant can be a great solution if they are interested and able to purchase the property. However, it’s important to keep in mind that not all tenants will be interested or able to purchase the property. In that case, you may need to explore other options.

Sell to an Investor

Another option available to you is to sell the property to a Buffalo, NY investor. Investors are often interested in purchasing rental properties because they are already generating income and have established tenants in place. They may also be willing to pay a fair price for the property because they see the potential for future income.

If you choose to sell to an investor, you should first consult with a real estate agent to find a qualified investor who is interested in purchasing the property. You should also have the property appraised to determine its value and negotiate a fair price with the investor.

One potential downside to selling to an investor is that they may not be interested in keeping your tenants in place. They may want to renovate the property or bring in their own tenants. If that’s the case, you’ll need to give your tenants notice that their lease will not be renewed and that they will need to find a new place to live. Proper communication will make the sale easier for all parties involved. 

Paying Your Tenant to Leave

If your tenant doesn’t want to purchase the property and you’re unable to find an investor who is interested in keeping your tenants in place, you may need to consider paying your tenant to leave. This can be a difficult decision, but it may be necessary if you want to sell the property quickly and without any legal complications.

If you choose to pay your tenant to leave, you should first consult with a real estate attorney to ensure that the transaction is legal and that all necessary paperwork and disclosures are completed. You should also negotiate a fair price with your tenant and have them sign a release of liability agreement to protect yourself from any legal action in the future.

One potential downside to paying your tenant to leave is that it can be expensive. You may need to offer a significant amount of money to incentivize your tenant to leave. However, if you’re unable to find another solution, paying your tenant to leave may be the best option for everyone involved.

What to Do If Your Tenants Are Causing Trouble

It is one thing not to want to leave but quite another to cause trouble for the property owner. As a landlord, you’ll know that one of the most challenging situations you may face is dealing with difficult tenants. These tenants may have been problematic in the past, but can present a whole new set of challenges if you inform them of your intent to sell.

In these situations, you may want to enlist some outside help. You can work with an agent who understands difficult tenants, hire a property manager to help with your tenant, reach out to a real estate lawyer for advice, or enlist the help of Buffalo Brick & Mortar LLC to buy the house quickly. 

If your tenants are causing problems, a real estate attorney can help you negotiate with your tenants and ensure that any legal issues are resolved before the sale of your property. They can also help you draft a lease agreement that protects your rights as a landlord.

Dealing with difficult tenants when you want to sell your rental property can be a challenging situation. However, there are options available to you, including hiring a property manager, working with a real estate agent and attorney, selling to an investor, and paying your tenant to leave. Before making any decisions, it’s important to consult with professionals who can help you navigate legal issues and ensure that you’re making a legal and informed decision. By following these tips, you can ensure that the selling process goes as smoothly as possible while also protecting the rights of both the landlord and the tenants.

Selling a tenant-occupied property in Buffalo involves legal complexities, particularly if you plan to ask tenants to vacate early or if there are issues with the lease. In such cases, it’s wise to hire an attorney who specializes in real estate or landlord-tenant law to avoid complications during the sale.

Selling a rental property with tenants in Buffalo, NY, can be a lucrative and straightforward process if approached carefully. By understanding your rights and responsibilities as a landlord, maintaining open communication with your tenants, and working with professionals, you can successfully navigate the sale and secure the best deal possible.

Need help with selling your rental property in Buffalo? Contact us today, and let our experienced team guide you through every step of the process!