Tuesday, February 5, 2013
We have experience in working with real estate agents when clients want to adjust their portfolio. A common question we are asked when clients are looking to sell is 'what do I need to know about selling my property with a fixed term tenancy'.
Once you are certain you are going to list it for sale, make sure you inform your property manager as you have a legal obligation to inform the tenants, and your property manager should do that on your behalf.
The real estate agent will need to touch base with your property manager to get tenant details for access. The property manager can also provide them with any details they need.
Your tenant has a fixed term lease which is likely to continue past the hoped-for sales date. This means you will need to sell the property with a tenancy in place, or end the tenancy early by mutual agreement (otherwise known as ‘make them an offer they can’t refuse’ – could be expensive, or very cheap).
If you sell it while you have a fixed term tenant, and you can’t reach agreement with the tenant about ending the lease early, the options for dealing with it are either that the settlement date is pushed back until the lease end date (and you need to wait for your money until then), or the new owner becomes the landlord for the duration of the lease. Obviously this will require some negotiation with the prospective purchaser as to their preference.
Of course, there is another option, offer the property to the tenant to buy. You may want to get an independent valuation to set the price, and have your lawyer do the negotiating if necessary, or use an agent to facilitate the sale. Let your property manager know if you want them to sound out the tenant as to this option, and potentially save you sales fees.
If you are a landlord with a fixed term tenancy and you are wanting to sell, get in touch. Great property managers, like us, have good solutions.
Posted by Jackie at 6:28 PM