Can I sell a property with a tenant in place???
Absolutely, you can!
!
I just bought one last week with a tenant in place, and in the midst of COVID, we’ve actually been buying a lot of houses from landlords who had tenants in place, even we bought one recently where they were in the process of an eviction. A few months ago, unfortunately, we had another one where we did have to evict the tenant out of the house due to issues other than not paying rent.
And if you’ve heard… “There’s a moratorium on evictions!” Well yes, there is a moratorium on evictions, but there are some exceptions to that. There are still evictions happening, and you can still evict tenants, and you can still file for eviction, and you can still go through the process, they just won’t issue you your eviction (If the reason for eviction is non-payment of rent). They won’t actually evict the tenant until they’re allowed to, but you’re allowed to evict for other reasons: Lease violations, hold-over tenants (where their lease has ended and they choose not to move out).
Also, I’ve noticed, and unfortunately, this is just the nature of the times, a lot of landlords are not renewing their leases and they’re putting their tenants on month-to-month leases. So in the event that they need to get a tenant out, since they’re on a month-to-month, they can just give a notice of non-renewal, and give the tenant 60 days notice to move out. So I’ve seen that happening a lot.
I own rental properties, myself. All of mine are on written leases because they were done before COVID. I just bought a property last week with a tenant in place and unfortunately, the tenant is late on his rent already at the beginning of this month, and I really hope that he pays in the next two days, because I really don’t want to go through an eviction process. I’m a super nice guy, but you have to pay your rent on time. So anyway, and he has a job, he’s totally employed. It’s not a matter of not having the money, it’s just a matter of priorities.
so…
Can you sell a property with a tenant in place? Absolutely.
Georgia law says that whenever you sell a property, the lease carries over to the new owner, so the new owner has to honor that lease agreement, whether that is a written lease agreement with an expiration date and a starting date, or that is a month-to-month (verbal) tenancy. So whenever we buy a property with a lease in place, we have to abide by whatever the lease says. We’re required by law. All the security deposits have to transfer over, that’ll get done on the closing statements.
If there is no lease in place, and there’s a month-to-month tenancy and you have a verbal agreement with your tenant, what we would do, in our case, is we would have you fill out a document, it’s called a tenant estoppel agreement. It’s very common in the commercial real estate world, that basically just outlines the terms of the agreement, rent is X amount, there is or is not a security deposit, and is X amount. This is month-to-month. This is through April. Whatever the terms are… The landlord owes them money or no one owes anybody any money. We’ll spell out all those terms to make sure that at closing, it’s very clear that these are the terms. This is the rent. This is the security deposit.
The tenant also signs this estoppel. The tenant, the landlord selling the property, and the new landlord all sign this estoppel agreement. So they’re all agreeing to this document that says that upon transfer of title, everybody’s on the same page. This is essentially what this document does.
I learned this through the hard way… through buying some properties with tenants, where I didn’t do this in my early years, and it was painful.
You can absolutely sell a property with a tenant place. We buy them with tenants all the time, it’s not a problem at all, and we have to abide by whatever the lease agreement is in place, as the new buyer.
If you have a question about taxes, we’ve got some great tax professionals we can get you in touch with, in terms of the tax implications of selling a rental property. Also, you might want to watch our video on owner financing. Maybe if the house is paid for or almost paid for, it might be worth selling it on owner financing, where you can kind of defer some of those taxes over time, spread that tax burden out over time, and still get some monthly cash flow from the property, but not have the headache of dealing with the tenants anymore, fixing things, paying the taxes, property taxes, blah, blah, blah.
All the other responsibilities that come along with owning a property, when you’re owner financing, you don’t have to deal with that, you literally just get a check every single month, and then you get the security of having a security deed and a promissory note, and in the event that whoever buys it from you defaults, you can just go through the foreclosure process, which in Georgia, is actually relatively simple and pretty quick, because we are a non-judicial foreclosure state.
I hope this helped you.
If you have a property that you want to sell with a tenant in place, click on the link below, go to our website.
https://www.arborviewhomebuyers.com/
We’d love to chat with you about it, see if we might be a good fit.
If you fill out the form on our website, a member of our team will call you ASAP
…or you can just call us at (770) 810-5715.
I hope it helped you, and you have a wonderful day. Thanks, guys.