Can You Sell an Occupied House with Tenants?

Can You Sell an Occupied House with Tenants in Calgary, Alberta? Absolutely! Selling a rental property poses unique challenges, particularly when tenants are involved. As a landlord, you must protect tenants’ rights while selling your property. It’s crucial to remember that while it’s your property, it’s also someone’s home. In this blog, we’ll guide you on selling an occupied rental property, covering tenant notification, property preparation, and closing the deal.

How To Sell an Occupied House with Tenants

Selling a house with tenants requires meticulous planning, communication, and cooperation to safeguard both landlord and tenant rights.

1. Notify Your Tenants:

The initial step is informing tenants of your intention to sell, providing a written notice including the listing and showing dates, usually delivered 24 hours in advance. Transparency throughout the process, updating them on changes and developments, fosters a smoother process.

2. Prepare Your Property for Sale:

After notifying tenants, focus on cleaning, repairs, and staging for optimal presentation to potential buyers. When tenants still reside in the property, respect their privacy by scheduling cleaning, repairs, and showings at convenient times, being mindful of potential disruptions.

3. Work with Your Tenants:

You must collaborate with tenants, demonstrating flexibility and accommodation. Adjust showings to their comfort levels, considering limitations on the number and scheduling. Being open to their preferences and concerns, especially about strangers in their homes, helps maintain a positive landlord-tenant relationship.

Anticipate and respond to any questions or worries your tenants may have about the selling process. Whether it’s regarding their security deposit, lease terms, or future housing arrangements, prompt and honest communication is crucial for maintaining a positive landlord-tenant relationship.

Exploring Lease Types:

As a landlord considering the sale of your occupied rental property in Calgary, Alberta, your available options depend on the type of lease your tenants hold.

Fixed-Term Leases:

For tenants under fixed-term leases with specific end dates, typically six months or a year from the lease’s commencement. When you sell a property with a fixed-term tenant, the lease must be assumed by the new buyer in Alberta. This can impact your ability to sell, especially if the buyer intends to reside in the property.

Attempting to terminate a fixed-term lease prematurely may disappoint you but it cannot be arbitrarily broken, even during a property sale. Resolving this situation requires mutual agreement between both the tenant and landlord.

Month-to-Month Leases:

If your tenants operate on a month-to-month lease, which automatically renews monthly, various options are available for landlords looking to sell their property. For month-to-month leases, there is slightly more flexibility. You can provide the tenant with a 90-day notice, including three full months, but only after removing any buyer conditions.

Check out: https://www.alberta.ca/rights-and-responsibilities

Consider the following examples:

Example 1: Month-to-Month Lease

Conditions were removed on February 2nd.
Landlord can give the tenant 90 days notice, but the notice period includes three full occupancy months (March, April, and May), requiring the tenant to vacate by June 1st. Potential buyers may find this extended timeline less appealing, impacting their decision, particularly if purchasing as a residence.

Example 2: Fixed-Term Lease.

Conditions were removed on February 2nd.
Tenant on a fixed-term lease until July 30th.
Lease is attached to the property, and even if the new owners take possession in March, tenants can stay until the lease ends on July 30.

For buyers intending to live in the property, this presents a significant issue and could jeopardize the sale. Breaking a fixed-term lease without tenant violation is not possible unless both parties agree. An agreement might involve assisting with moving expenses, providing free rent, or other concessions, emphasizing the necessity for mutual understanding. Without a seperate agreement, the tenant can remain until the lease naturally concludes.

Options For Selling An Occupied House with Tenants

1. Wait Until Lease Expiry:

Opt for simplicity by selling the property once the lease concludes. This straightforward option minimizes disruption for tenants. Ensure compliance with lease terms, which may include specific provisions related to property sale.

2. List with Tenants In Place:

Explore the option of listing the property while tenants are still in residence. Although more challenging, it can be attractive to potential buyers wanting to see the property in its current state. Communication with tenants is key, respecting their privacy. Provide ample notice before listing. Showings Must provide a minimum of 24 hours notice for access, and consider offering incentives for tenant cooperation, such as rent reductions or cash bonuses for maintaining the property during the sale.

3. Sell to a CalgaryCashBuyers:

For an easy sale without dealing with property listing or waiting for the lease to end, consider selling directly to CalgaryCashBuyers. We specialize in quick property purchases and offer cash payments. While the selling price may differ from the open market, selling as-is can save on commissions, repairs, and holding costs. Plus we take on all the tenant headaches and give you peace of mind.

4. Sell to Your Tenants:

Consider selling the property to your tenant as a potential solution. This option can create a mutually beneficial situation for both parties. Your tenant, already familiar with the property and rooted in the community, might be willing to pay a higher price, given the convenience of not having to relocate.

Financial considerations are crucial. If traditional financing proves challenging for your tenant, exploring owner financing might be necessary. This involves you, the seller, providing financing to the buyer, your tenant, instead of them obtaining a loan from a conventional lender.

While selling to your tenants can be an excellent solution when they are interested and financially capable, it’s essential to recognize that not all tenants may have the interest or means to purchase the property. In such cases, exploring alternative options will be necessary.

What to Do If Your Tenants Are Causing Trouble.

Dealing with problematic tenants as a landlord can become even more challenging when selling your rental property. In such situations, seeking external assistance is recommended. You can collaborate with an agent experienced in managing difficult tenants, hire a property manager, consult a real estate lawyer for guidance, or enlist the services of CalgaryCashBuyers for a quick property purchase.