Selling With A Tenant – Ensure That The Sale Goes As Smoothly As Possible

Selling a tenanted property often makes financial sense for investors. Not only do you need to sell at the time that’s right for you in terms of the highest possible sale price, but continuing to receive rental income right up until the property sells can make a huge difference to your bottom line and ensure that you stay on top of investment loan repayments.

There a 2 types of tenancies – fixed or periodic.

FIXED TERM

If a property is sold when there is a fixed term tenancy in place, the tenants are entitled to stay on until the end of that original term under the same conditions.

PERIODIC TENANCY

With a periodic tenancy either party can end the tenancy with notice however it should be noted that unless specified at the start of the tenancy, a periodic lease is considered to be “Long Term” i.e. 1-2 years. Significant compensation can be awarded to the tenant if the tenancy tribunal finds that a property was sold and tenancy ended following an unreasonably short tenancy.

You should be able to judge the likelihood of the above as you have dealt with the tenant thus far and should know how far they would be willing to go.

Having worked in Real Estate for 10 years with investor properties buying and selling, I have not seen this happen and believe it very unlikely that a tenant would take this precise case to tribunal.

Landlords must give 90 days’ notice, 42 in special circumstances such as family moving into the property.

If neither party gives notice it will be understood by all parties – Vendor, Purchaser, Salesperson and Tenant that the tenancy will be ongoing. When the Purchaser settles on the property they become the new landlord and can if they wish give notice to end a periodic tenancy. At any stage inside of the owner giving 90 or 42 days’ notice, the tenant can give their 21 days’ notice.

Getting the tenants onside:

Putting yourself in the tenants shoes, having all these strangers come through your home, not knowing if the property will be sold with tenancy in place, it can be a pretty stressful time so anything you can do at this time to ease the situation will be greatly appreciated and more likely to gain their cooperation for your sale.

While tenants legally have to provide reasonable access for the owner and their agents, a clever salesperson knows a little care for a tenant goes a long way. Whether from yourself or the salesperson a couple of movie tickets, vouchers to a café down the road or some other small peace offering can go a long way to tenant cooperation when selling a property.

Movie or coffee house vouchers are a great idea as the tenants now have somewhere to go during a time when you or the agent might want them out of the way.

Your agent will want access for photos of a preferably tidy property (down to the tenant – see why we sweeten them up?), plus odd private viewings and open homes.

Be as caring as possible to the tenant in these situations and they will repay you in kind by not being a hindrance to the agent and sale.

Disclaimer: The information contained in this publication is exclusively for promotional purposes and is not to be relied upon for legal or contractual dealings. Tenant Source recommends you seek independent legal advice, and that you may need to seek technical or other advice and information prior to making any actions in regards to tenancies in your investment properties. Tenant Source Ltd including its staff and directors accepts no responsibility for any issues arising as a result of taking advice from this publication.