If you want to sell a rental property, you’ll have to prepare it for showings and advertising. However, you may also find that there is a major roadblock on the path to selling: someone is currently living there. However, this does not mean hope is lost. You can still sell the property if you work through the correct legal channels and take the right actions. In fact, you may even find that your current tenant is willing to work with you to make the process even simpler. To help you out, our Baltimore property management team has put together this guide that will give you the information you need to sell your occupied property.
Contents of This Article:
- Why Would You Want to Sell a Rental Property?
- How to Sell an Occupied Rental Property
- What If Your Tenant is Uncooperative?
- Make the Process Easier With BMG
Why Would You Want to Sell a Rental Property?
- You became an “accidental landlord” because your property wouldn’t sell or because you inherited the property.
- You have decided that you no longer want to be a landlord.
- You aren’t getting a good return on your investment, and you’re looking to cut your losses.
Whatever your reason, you’ll be happy to know that you can sell your rental property and that the process doesn’t have to be difficult. Let’s discuss what you need to do to avoid legal trouble and upsetting your tenants when selling an occupied property.
How to Sell an Occupied Rental Property
If you’re planning on selling your rental property, it’s important to know the legal steps to inform your tenants. Additionally, you’ll want to consider strategies to work with them to make the process easier. Here are a few tips to keep in mind.
Give the Proper Amount of Notice
As a landlord, you are legally required to let tenants know ahead of time if you need to end their tenancy. You must do this by sending the tenant a letter stating the date they must vacate the property (within the required notice time that varies from state to state).
In Maryland, here’s what you are required to do for each type of lease:
- Week-to-week lease – You must provide the tenant with a one-week notice.
- Month-to-month lease – You must provide the tenant with a one-month notice.
- Yearly lease- In most cases, you must give tenants a three-month notice. However, certain circumstances call for different requirements. For example, in Montgomery County, you only need to give tenants a two-month notice unless the property is a single-family home. Research the local laws in your area to determine exactly how far in advance you need to inform the tenant that you’re terminating the lease.
Remember that you do not need to give your tenants a reason for the tenancy termination if they have a month-to-month lease. That said, it may be a good idea to do so if you want them to cooperate while you show the occupied property. Plus, if you let them know that you are looking to sell the home, they may even be interested in buying it. This would make the entire process easier for both of you!
Not all tenants will be thrilled to learn that they must move out sooner than they planned. That’s why it’s important to always build healthy tenant/landlord relationships. It will make selling the property much easier while they still live there.
Often, agreeable tenants will quickly begin looking for a new place to live once you inform them that the lease is being terminated. Otherwise, they’ll have to deal with showings and cleaning the property to ensure it looks good to potential buyers.
However, if they must stay in the property while you show it to prospective buyers, you may benefit from offering to work with them by:
- Lowering their rent for the duration of their lease
- Helping with moving costs
- Guaranteeing them enough time to find a new home
This is a great way to express your appreciation for their patience and ensure they cooperate during the selling process.
What If Your Tenant is Uncooperative?
If the tenant remains in the property past the lease termination date, you may need to consider beginning the eviction process. However, you can try a “cash for keys” tactic before you evict your tenant. After all, the eviction process can be costly and time-consuming (up to 8 weeks, in some cases!).
“Cash for keys” simply means that you pay the tenant to move out early. You can do this by:
- Offering to make up the difference between what the tenant is paying at your property and what they will need to pay at a new property for a specified amount of time
- Offering to pay their security and pet deposits at their new residence
- Offering them whatever amount of money you can afford
This is a great way to quickly remove a tenant living in your property without permission and avoid eviction.
If all else fails, you may find it easier to wait until the tenant willingly vacates the property before you sell it. While this is not ideal, it could save you a lot of money. It can also help you avoid the hassle of showing and selling your property while an uncooperative tenant lives there.
Tip: If you’re interested in learning more about how to deal with difficult tenants, check out this blog post!
If you’re looking to sell a rental property that’s occupied, it’ll be much easier if you have a good relationship with your tenants. It’s easy to understand why anyone could get upset learning that they must move out before they’re ready to. However, explaining the situation to them thoroughly will often help them become more receptive to what you’re saying.
Remember – if you need help drafting a lease agreement that allows you to show the property while a tenant still lives there and/or terminate a lease early, consider a Washington DC, Laurel, and Baltimore property management team like Bay Property Management Group.
We’ll help you ensure that your lease agreement covers everything necessary so that you can sell your rental property as needed. Contact us today to learn more.