Legal Issues When Selling Tenant-Occupied Homes
Rents are sky high in Florida, and that means that many people who own property are renting their property out. The problem is that while the tenant is there, the value of the home is going up and up, in today’s hot real estate market. So can you sell your house and take advantage of skyrocketing prices, even while there is a tenant in the property?
Lease Remains in Effect
Selling your home doesn’t automatically terminate the lease with the tenant in the property. If the tenant is otherwise in compliance with the lease, you can’t evict the tenant, just because you are selling the property.
As a general rule, the tenant must be able to carry through to the end of the lease. You must give the tenant 60 days before the end of the lease, to notify the tenant that they will not be able to remain in the property.
If there is no written lease, the tenant is entitled to 15 days notice, before the end of the next monthly rent period.
Options When a Tenant is in the Property
But if you have a tenant in the property and want to sell it, you may still have options.
You could try to negotiate an exit for the tenant, perhaps with some accommodation, like a payment of money, or the agreement for the tenant to not pay any rent for the last few months, in return for an early termination of the lease. If the buyer wants the property badly enough, the buyer may be willing to contribute to what is paid to the tenant.
The buyer can purchase the property, and then move in when the tenant leaves. This does leave the buyer with potential problems, such as if the tenant never moves out, or stops paying rent, and an eviction is necessary.
This also leaves the buyer on the hook for any damage to the property caused by the tenant while the tenant is in the property but before moving out.
However, on the positive side, the rent the tenant is paying would go to the buyer, giving the buyer a financial incentive to allow the tenant to remain in the property for the duration of the lease.
Work With Your Lawyer
Note that if you choose to purchase or sell while a tenant is in the property, you should work with your real estate lawyer, as you don’t want the property being classified as “commercial property” just because there may be a tenant remaining there for a few months.
You also have the option of putting money in escrow, to protect the buyer, in the event the tenant destroys property, or needs to be evicted. If there are no problems, the escrow money, originally paid by the seller to protect the buyer, would be returned to the seller.
Additionally, remember that if there is a tenant in the property, you may need more time to close. That’s because things like inspections or surveys on the property, may have to be coordinated with times that are convenient for the tenant.
A lot of legal issues can come up in a real estate closing. We can help. Contact the Tampa real estate transaction lawyers at the Gilbert Garcia Law Group, P.A. about your real estate closing or any real estate legal issues.