How to Tell Tenants You’re Selling?

QUESTION: I have decided to sell my rental property. What obligations do I have to my tenants and the potential buyers?

ANSWER: The sale of a rental property can create difficulties if not handled well. Keep in mind that you, the buyer, your realtor and your tenants have different interests during this time, so be careful.

An important issue is preserving your tenants’ privacy while your property is on the market. You and any real estate agent are required to give at least 24-hours notice, either orally or in writing, before entering the premises. To ensure that disturbance is kept to a minimum, your agent and tenants could agree in advance on specific times each week for showing the property. A lockbox can inconvenience your tenants, and created a feeling of lack of privacy, so it is preferable not to use one, unless the tenants agree. You might also consider giving the tenants a rent reduction for any inconvenience, and to encourage them to accommodate last minute or unscheduled showings.

Another important issue concerns the terms under which your current tenants occupy the premises. If they have a 12-month lease with a number of months to go, you or the new owner will have to honor the lease. If the continuation of occupancy by your tenants creates a problem, you might consider buying them out.

Whatever the terms of tenancy, you and the buyer must agree whether to keep the tenants or to have the property vacated before closing. If the new owners want the property to be vacant, you must provide your tenants with sufficient notice, and you must assure that they have moved out. If the tenants are to continue their tenancy, make sure that you provide the new owners with all necessary records, including a copy of the rental agreement, a copy of the move-in check list, if you had one and an accounting of all deposits received.

Also, it is generally a good idea to give the tenants a notice that ownership has changed, and to provide them with the name and address of the new owner.

Some Prefer Landlord to Property Owner

To those of you who answered our call for suggestions regarding another name for the term landlord, we thank you. As it turned out, your responses were fairly evenly distributed. Some of you liked, and considered the title of “landlord” as a badge of honor, to be worn proudly. Others suggested that “landlord” be replaced by “property owner,” and that a person who manages property for a landlord be called “property manager.” In our column, we will continue to use all these terms, as appropriate, when we refer to the person who owns or manages rental property. Again, thank you for your letters.