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I am thinking about selling my rental property, but currently there are tenants living there. Is it possible to "hand over" the current leases to a buyer/landlord or do I have to wait for all the leases to end?

The rental property is located in Columbia, Maryland / Howard County.

  • 5
    Hopefully your rental contracts include a binding clause such as "The covenants, conditions and agreements contained in this Agreement shall bind and inure to the benefit of the Landlord and the Tenant and their respective heirs, distributees, executors, administrators, successors and assigns." – Spehro Pefhany Oct 20 '16 at 18:40
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Yes you can sell the property while it is being rented.

The new owner has to honor the current lease agreements. Expect to provide copies of the leases to the potential buyer so they can review the contracts before committing to the purchase.

The current owner isn't obligated to inform the renters that the property is for sale, though being able to show rented units would require notification in advance. The rules for notification may be discussed in the lease documents, or local law.

It is not unheard of for the new owners to offer incentives to the current renters to either leave early, or to encourage them to not renew. This is so they can either renovate a building or convert the building to another use.

Renters in a month-to-month mode have to understand that they could receive their notice to not extend at any time, with the notice following the rental contract provisions.

  • Probably should note it's also common for people who purchase a currently-rented home to evict the tenants with proper notice (as described in the lease documents, as most leases state with ample notice, the lease terms can be terminated whenever the leaser sees fit, such as during a property sale, etc). – SnakeDoc Oct 20 '16 at 18:53
  • "as most leases state with ample notice, the lease terms can be terminated whenever the leaser sees fit" -- I don't think that's typically the case (in the U.S. at least). If the owner could terminate the lease whenever they see fit there wouldn't be a point to having a lease. – Luke Oct 20 '16 at 20:58
  • Usually it's terms specifically for things like a property sale (new owner gets to decide if they want to rent or not), or financial hardship, etc. And no, "not whenever they see fit", they must still give notice (30 days usually) and no early termination/break-lease fees. The point of a lease isn't just to protect length of terms; it protects renter and rentee's rights alike, clearly defines allowed uses of the property, etc. – SnakeDoc Oct 20 '16 at 21:03
  • I've seen a MLS listing that specified that there were tenants there, the house wasn't to be shown but the buyer got a contingency to look it over before actually buying it. (Obviously, the intent being the tenants wouldn't find out about the sale for as long as possible.) – Loren Pechtel Oct 21 '16 at 4:40
  • @SnakeDoc your comment that it is common to evict should be a separate answer..because that is the opposite of what I am saying. – mhoran_psprep Oct 21 '16 at 9:59
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Yes, you can absolutely sell a rental property while it is occupied by tenants. This is very common, and in fact, the house I was renting was sold while I was still living in it. The new owner was actually glad, because he had cash flow right away and knew that I was a good tenant taking good care of the home.

Nothing really changed for me, because my lease still had six months to go at the time he purchased the house, and when that lease ended, we negotiated a new one.

All I'll suggest is that you should discuss your plans with the tenant(s) and give them the chance to make plans of their own for moving in the event the new owner wants to live in the house. The idea is to make this a smooth transition for everyone involved.

  • 1
    +1 for pointing out that having existing tenants is actually a benefit to the purchaser. You may even get a small extra price premium as a result. – Bob Tway Oct 20 '16 at 15:25
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    +1 for advocating for communication beyond legal requirements for tenants. – Aias Oct 20 '16 at 18:25
  • @MattThrower Not always. If someone is a first time home buyer, for instance, many/most lending institutions and/or government grants forbid purchase of "investment homes", which would preclude having renters. When I was dipping my toes in the water, this problem seemed it would be solved by evicting the renters and declaring the property to be your future primary residence. – SnakeDoc Oct 20 '16 at 19:12
  • @SnakeDoc, it's unlikely a first-time buyer would be trying to buy a home as an investment property this way, but you're also correct if the buyer is attempting to use a first-time buyer program to do do. In the majority of cases, someone who is considering purchasing a renter-occupied property is doing so for investment purposes and is probably not a first-time buyer. – Daniel Anderson Oct 20 '16 at 20:10
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    @jpaugh No, that restriction is only for those using fed grant money in down payment assistance programs, or those using certain types of loans such as FHA, USDA, etc. – SnakeDoc Oct 21 '16 at 3:51
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It is not impossible, if you can find a buyer who wants those tenants and that lease agreement. Many will prefer to buy the place empty, so they can renovate everything at once and then find their own tenants.

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