Right now, there is currently strong demand for residential real estate, which means that properties can command better prices. The rental market has also been competitive, meaning that tenants may not move out and move on as quickly as they once did.
Whether you want to get out of the landlord business entirely or just make the best of a hot market in a certain neighborhood, you might want to sell an investment property currently occupied by a tenant. Can you legally sell a property when you have already rented it out to someone else?
The terms of your lease may affect your rights
Generally, the owner of a property can do with it what they see fit, provided that their actions don’t violate the law. However, landlords sometimes enter into agreements with their tenants that limit their rights in the future.
Any lease agreement that includes the first right of refusal will generally require that you inform the tenant of what you believe the fair market value is for the property so that they have the option of buying it before you list it. If the lease does not have an agreement that gives the tenant preferential consideration for the purchase of the property, then state law determines what steps a landlord can take.
Landlords can terminate a lease before they sell
Under Wisconsin law, a landlord can terminate the lease with the agreement of the tenant. If the tenant does not agree, the landlord can terminate the lease in accordance with its terms. That may mean giving the tenant a month’s notice if they have a month-to-month lease.
Landlords may also need to wait until the current lease’s term expires and then provide the tenant with notice at least 14 days before its end that they do not intend to renew it.
The new owner can make a decision on the lease
Typically, leases transfer with the property to the new owner, although they can choose not to renew it. If you do not want to wait until the lease is up to sell the property, you can potentially list the property while it is occupied by tenants. You will usually have to comply with state law regarding providing notice to the tenants for showings and repairs related to the listing.
The new owner may not be able to move in until after the current lease ends. Those additional steps between purchase and occupancy may deter some buyers, but there are often buyers willing to accept even lengthy delays and occupancy for the right property.
Knowing more about your rights as someone hoping to sell a piece of residential real estate can help you plan for that major transaction.