My very first experience of being involved in a sale where a tenant occupied the  property was amusing.  It worked out, but the potential to kill the sale was real.  The tenant did not want to move.  She made herself a very nice place to live, planted flowers and kept her home  tidy. 

She was cooperative at first, working with the listing agent to allow the property to be shown and allowed inspections.   Then, came the crushing event.

The tenant  informed the listing agent that because of a depression in the lawn area on the side of the house, she was convinced there was a “tank” buried there.  Well, tanks in real estate sales are not to be taken lightly.  Especially when you are selling Vintage property.  Homes were often heated with fuel oil stored in tanks, often buried.

Now that the listing agent became aware of her “concern”, the duty to disclose was now in force.  It was disclosed, and now the Buyer had the opportunity to make sense of it and further inspect if they chose to, which allowed for an extension of the inspection contingency. 

And so began the search for the buried tank.  No tank was found.  Sale went through.  All turned out well. 

Properties that are tenant occupied can present challenges in the sale process.  Tenants have rights.  Tenant/Landlord Law is very clear and explicit. 

Basically, when a property is tenant occupied, and an owner wants to sell,  understanding a tenant’s rights is fundamental.  Depending on whether the tenancy is on a month to month basis or in a fixed lease term, will govern what notice requirements are required. 

This will lead to the next question.  Whether you will sell the home tenant occupied, subject to tenants rights,  or to be delivered vacant upon close of escrow.   The Buyer will often  answer the question in their offer.   

If a property is sold tenant occupied, the Buyer inherits the tenancy.   This is the way investment property is usually sold.  Not so in the case of residential, unless held for investment, in which case the Buyer makes an informed choice to continue with the terms of the tenancy when they close escrow.  Most residential sales where the Buyer intends to occupy the home as a principal place of residence will only accept that the home be vacant upon close of escrow. 

Understanding tenants rights in relationship to terminating a tenancy to deliver property vacant is imperative to successful close of escrow.  Time lines in the contract for proper notice need to be accounted for.   Uncooperative tenants can also impact contractual obligations between a Buyer and Seller.   A Buyer and Seller who are attempting to make good on their promises in contract, but are restrained because of an uncooperative tenant,  can find the sale process disrupted.

I have to say, my experience of working with tenants and landlords in the sale process has been rewarding and successful.  It starts with communication with all parties.  Being considerate, working together.   Discussing expectations with both landlords and their tenants of what a sale process involves.  Often times, a Realtor can be instrumental in helping relocate a tenant to another home.

Realtors are conduits of good relations between buyers, sellers(landlords) and their tenants to assist with a smooth and successful transition for all.