Your tenants should be your top priority if you are selling your investment property
Putting a rental property on the market can be a disruptive time for tenants.
Open inspections, potential buyers driving by and regular contact from the selling agent to arrange further inspections can significantly interrupt your tenant’s daily routines.
However, waiting for the lease to expire before selling a property is not always an option.
Maintaining a positive relationship with your tenant can help to ensure that they remain cooperative throughout the sale process.
If you are looking to sell your rental property, your tenant’s lease should be the priority.
This can contribute to a smooth and hassle-free sale and reduce the likelihood of the tenant causing malicious damage to the property if they feel as though they have been mistreated.
Tenants who respect the landlord and the property are likely to ensure it is well maintained and tidy for open inspections, which can help to attract possible buyers.
A tenanted property that is clearly well looked after can also be an attractive proposition for potential investors. If they are the successful buyers, they may look to keep the tenants rather than trying to find new ones.
How you manage the situation and what you can request from the tenant depends on the lease agreement that was signed by you and the tenant at the beginning of the tenancy.
If the lease is a fixed term agreement, you must allow the tenant to remain in the property until the end date stated on the agreement.
However, if you would like them to vacate the property prior to this date, you can try to negotiate with them.
If the tenant is on a periodic lease, you are entitled to end the agreement.
The termination notice period and requirements vary from state to state and according to the tenancy agreement, so make sure you are familiar with these details.
It is therefore a good idea to ensure any periodic lease agreement you present to tenants at the beginning of a lease outlines what would happen if you wish to sell the property so they are aware of the process prior to entering the agreement.
There are many things landlords can do to maintain a positive relationship with their tenant while selling their rental property.
Regardless of the type of agreement you and the tenant entered into, you are required to issue the tenant with written notice to inform them of your intention to sell the property before the property is listed for sale.
Giving the tenant as much notice as possible regarding the property being placed on the market will allow them time to plan for the situation and, if necessary, relocate.
Passing as much information as possible from the selling agent onto the tenant and acting as a go-between for each party will reduce the likelihood of surprises down the track.
The selling agent must discuss open inspection times with the tenant and seek their permission to use photographs that contain any of their possessions in marketing materials.
You may wish to ensure that the tenant is happy with the arrangement and that the selling agent obtained the agreement in writing.
If the property is nearly due for a routine property inspection prior to being put on the market, you may also wish to bring the date forward and conduct it before open inspections commence.
This will allow you to identify and action any maintenance issues prior to the property going on the market and limit interruptions for the tenant while the property is up for sale.
Once the property has been sold, it can be a nice gesture to offer your tenants an excellent reference that they could use to apply for their next rental property.
Carolyn Majda is insurance manager at landlord insurance specialist Terri Scheer.
