Real Estate

Selling a Tenant Occupied Rental Property

Diana Hill
Professional Real Estate Investor Instructor

As an investor, at some point you will find yourself wanting to sell a rental property, either out of necessity or as part of your long range plan.  The rules and guidelines for gaining access to a property will vary from state to state. About half the states in the US have written state laws (created by the legislators) that are very specific about how landlords must handle entering a rented property.  In some other states the law has been created as “Judge-made law” and will be dominated by court opinions issued by the state’s appellate court.  And still, in other states there are neither legislative law nor Judge-law protecting privacy rights nor tenants. Here are some general guidelines and best practices (make sure you check with your local authority).

Free Trading WorkshopThe best practice is to have the process for “notice to entry” outlined in the lease.  Example: Landlord or his agent will not enter Tenant’s home except to deal with an emergency; to make necessary or agreed repairs; to supply necessary or agreed services; or to show the unit to potential purchasers, tenants, or repair persons. Unless there is an emergency, Landlord will give Tenant at least 24 hours written notice of the date, time, and purpose of the intended entry and will schedule entries during normal business hours, Monday–Friday. This should always be the go to document.

No notice is necessary if you or your agent call the tenant and ask for entry and they voluntarily allow you in.  Ideally, the relationship and communication between Owner/Manager and tenant is strong enough that showings can happen this simply.

Notice of Sale:

Some states require that an owner give tenants a written notice that the property will be for sale.  This process will outline the necessary notice for an owner to give a tenant regarding a showing of their unit. For instance, California law states: that once notice of sale (which must be in writing) is given to the tenant then for the next 120 day period the owner is required to give the tenant “reasonable notice” (which is presumed to be 24 hours)  before they enter the property.

What about entry for open houses? Set reasonable expectations, for example:

  • Agent can hold two open houses a month
  • Only one open house can be on the weekend
  • Agent must be present at all times during the open house
  • Agent must give 7 days’ notice of a proposed open house
  • Setting expectations and guidelines will allow better cooperation from the tenant.  You would also be amazed at what a simple thank you note and two tickets to the movies can do to help make things go more smoothly.

Difficult Tenants:

What if you have followed the letter of the law and what is reasonable and the tenant still won’t let you in?

Here are a few suggestions:

  • Write, or have written by an attorney, a strong letter explaining the possible consequences of not allowing entry.
  • Explain that they are leaving you no choice but to start an eviction process (assuming the lease has an entry provision) if they do not allow entry.
  • I would suggest you always try the non-confrontational approach if possible. After all, it’s easier to get a bee with honey than vinegar.

Great Fortune, Diana

This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.