Can a Landlord Sell a Property During a Lease?


A big question that many landlords and tenants have when owning or renting a property is “can a landlord sell a property during a lease?” The short and simple answer is yes.

Property owners are well within their rights to sell their property whenever they so wish. However, as a landlord it’s important you remember that you must stand by the lease that your tenants have signed. So what does this mean if you’re looking to sell your property to prospective buyers?

You can sell your property tomorrow if you wanted, but your tenant’s legal rights mean that they retain the right to continue residing in the rental property – even if you sell up. Basically, provisions are in place that means the new property owner will become their landlord until their lease is up – or if the lease allows for eviction upon sale.

Check your Lease Before Selling

A tenancy agreement lease is a legally binding contract. They are drawn up and signed by all parties to help ensure that there are as few problems in the future as possible. They protect the landlord by ensuring a minimum tenancy term is in place with acknowledgement of rental prices, payment dates and general conditions being agreed to by the tenant.

For the tenant, it ensures that rental prices cannot be raised without warning and that the property they rent is safe to call home. Without breaking the lease terms, there are very few reasons for eviction – even if you are selling it.

In some leases, it’s not uncommon to find a clause governing what happens in the event of a sale. This can make it easier to ask tenants to leave, but that doesn’t mean it’s the right thing to do. A property manager will be able to find ways that keep everyone involved happy, usually acting as a mediator. However, the law is put into place for a reason and trying to force tenants out who are protected by a lease could land you in hot water.

Think From a Tenants Point of View

Telling your tenants about your intention to sell the property should be your first priority. Transparency and honesty can help prevent unpleasant situations from occurring. As the property owner, you don’t have to worry about finding somewhere else to live. Put yourself in your tenant’s shoes for a moment.

Imagine you’re browsing the local property listings, looking for a place for friends to move to nearby. You’re awfully scrolling through and suddenly you see your home for sale. Nobody told you about it and now you’re starting to panic. Do I have to move out immediately? What about my deposit? Is this even allowed? These are the questions that will be racing through the tenant mind – and yes, they are likely to be angry.

Before you even take that first step of listing it in a real estate site, talk to your tenants or have a property manager do it for you. Alleviate their concerns, answer their questions and let them know that they are safe in their rental property. If you do this, they will be far more willing to assist with the process rather than make your property as unsellable as possible.

What Happens During the Property Selling Process?

As we mentioned above, getting the tenant on side by keeping them informed is a priority. Trying to show prospective buyers around a property that is inhabited by tenants can be hard – and it can also be disruptive to the tenants overall quality of life. Can a tenant refuse to allow viewers to enter? No. Can they prevent you from showing it every day? Yes.

Here are a few simple rules to be aware of to keep things running smoothly and with as few issues as possible.

  • As the property owner, you can request that the property is to be kept in good condition – as agreed to in the lease. However, you can’t request that the tenants make any changes or efforts to make the property more sellable.
  • Tenants are to be given sufficient notice of your intention to show the property to potential buyers. However, you’re required to keep weekly showings to a reasonable level – meaning unless the tenant agrees, you can’t show people around every day of the week.
  • You legally need to make potential owners aware of the fact that there are tenants currently in the property. They also need to know that once they purchase the property, the lease still stands and they become the new landlord.
  • You can notify potential buyers that the lease can be terminated after the sale has gone through – but they must abide by the contract’s current terms and conditions. This typically means providing notice of either 30 or 60 days to leave the property.

So It’s Possible to Sell a Property During a Lease?

Absolutely! At the end of the day, you are well within your rights to do as you wish with your property. As long as you make it clear to potential buyers that you currently have tenants in situ and navigate tenant anxiety with respect, all is good.

It’s also good etiquette to let your tenants know of your intentions before advertising it for sale. This way, they’ll likely be much more cooperative and willing to assist you rather than go out of their way to hold things up.

If you use a property manager, they’ll take care of all the small details and keep tenants informed throughout the process so you can focus on your next steps in life.

Make the Change – Get Leased

Keeping on top of rental property sales, laws, regulations and codes of conduct can be tricky for many landlords. If you have any questions regarding the upcoming sale of your property and the best way to handle current tenants, contact Leased today.

For more great info and advice covering rental properties, property management and building your property portfolio, check out our additional industry insights. Everything you need to know in one smart little place.

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