Several times during the week, I am faced with the situation where an owner wants to sell a piece of property that is currently leased under a long-term residential lease; usually a twelve-month term. Just because the market is hot and Seller-friendly or because an offer has been received does not ensure the owner can just terminate the lease. For some reason, owners are surprised when the answer on selling depends on the terms of the lease.
The lease agreement dictates the owner’s ability to sell while tenant-occupied. If the lease is silent on this issue, the answer is either, you sell it contingent on the buyer taking an assignment of the current lease which allows the tenant to remain in place until the lease term ends or you don’t sell it until after the lease term ends. If there is no lease, the owner can look at non-renewing the tenancy. If the lease specifically addresses the ability to sell while tenant-occupied then the owner needs to specifically follow the lease and its requirements in giving notice. Owners can certainly get creative and make offers to the tenant to move out like cash for keys, rent free for 30 or 60 days if they vacate, or refund the security deposit, or a combination of things. I recommend not paying any money until the tenant is completely out of the property. Otherwise, they might take the money and stay. If you know your tenant and what is important to them, you just might be able to strike a deal. If you strike a deal, put it in writing.
Another common issue when trying to sell while the property is tenant-occupied is access to the property. This is heavily contingent upon the tenant cooperating with this process. So, the better your relationship is with the tenant the easier the process will be. Tenants are entitled to quiet enjoyment of their property. Showing the property 34 times during a 4-hour period is probably a little excessive. Florida law does allow access for showings and the tenant is entitled to reasonable notice which is usually at least 12 hours’ notice. The more notice you give the better. If you are considerate of the tenant’s time, cooperation is easier to gain.
Please consult with an attorney of your choice before taking any action when your property is tenant occupied.
About the author: Lisa A. Troell is an attorney practicing in the areas of real estate including landlord/tenant and property management with the law firm of Chesser & Barr, PA in Okaloosa County, FL.
This article is for general information only and is not intended as and does not constitute legal advice or solicitation of a prospective client. It should not be relied on for legal advice in any particular factual circumstance.