Selling a Tenanted Property

You have decided to sell a property, but it currently has tenants, how do you handle this in an appropriate way that you can sell the property, but also do not put too much additional stress on your tenants?

If your tenant has signed a fixed lease you cannot make the tenant leave because you have decided to sell. The tenant can remain until the end of the lease, and the new owner will then become the lessor. Be aware of your state's laws when it comes to selling a property within a two month period of the tenant signing the lease. If they were unaware that this was your intention, then the tenant may have the right to end the lease with 2 weeks notice.

You have the right to show the property to potential buyers, and tenants have the right to 'quiet enjoyment'. So how do you handle this balance?

The best way to handle this balance is to put in writing an agreement between you (the landlord) and the tenant as to how to proceed. The agreement could include conditions such as:

• The property will be open on a specific day and time for open home inspections, which may or may not include public holidays.
• The landlord or agent will show the home only when a convenient time has been arranged with the tenant, and that you will provide at least 24 hours written notice of the showing. Or that the landlord and agent can entire the property if you have agreed within the past 7 days.
• Photographing the interior - encourage the tenant to remove any possessions they do not want to be photographed. In some states it is a requirement to have written consent from the tenant to go ahead with photographing.
• Outline any conditions of an on-site auction
• The tenant will pay reduced rent as compensation for the intrusion.

If you are not comfortable with providing a reduced rent, be prepared for the tenant to keep a record of your activities, which they may be entitled to claim later. This record will cover areas such as inconvenience suffered, number of times the property was shown, and how long they have had to stay out of the property. They may use this to gain compensation for interfering with their right to 'quiet enjoyment'. However, they have to prove that it was substantial, for their claim to be successful.

These are just guidelines for you to think about, if you are planning on selling your property. Please follow up with your state's tenancy union, or get input from your friendly lawyer. 

Have you sold a tenanted property? What are your tips when dealing with tenants during this time?

Sources: Residential Tenancies Authority  Tenants Union of Victoria