I own a two-story townhouse that I plan to sell after many years. I’ve had a tenant in there for the last few years, who has an annual lease. How can I sell the building and evict him?
The first question you should ask yourself from a legal point of view is whether you have the right to evict your tenant in the first place. You may need to sell the home complete with tenant (assuming the tenant wants to stay).
Start by checking any language in your lease agreement that speaks to eviction notices or sale of the home. If you used a form rental agreement, as many homeowners will do, there is likely some language in the lease that will address the number of days’ notice you need to give your tenant in the event of an eviction involving the sale of the home. Typically, this is 30 or 60 days for a standard lease or rental agreement.
The next question is whether any state or local laws restrict your ability to evict a tenant for purposes of a home sale, when the tenant him- or herself hasn’t done anything to warrant ending the lease. If your city has a rent control ordinance, for example, it likely requires the landlord to prove a legally recognized reason for eviction (“just cause”). This will apply regardless of what it says in your rental agreement. In most states, 60 days is sufficient notice.
Of course, you may have additional grounds for evicting your tenant, such as such as failure to pay rent, property damage, or material violation of the rental agreement. Such disputes might even be part of your desire to sell the home.
If you are already to the point of having found your buyer, notice-requirement language in your lease – or perhaps under state or local law – would mean you should immediately inform your tenant in writing of the situation. Chances are, closing the sale will take at least four to six weeks from the date of your initial sales contract with the buyer. (This is the time in which the buyer is busily inspecting the property, meeting with lenders, and the like). This is valuable time that the tenant will need in order to get his own affairs in order – namely, look for another home and move.
If you haven’t yet found a buyer, you may want to talk to your tenant about what’s coming, perhaps even providing more notice than is required. Put yourself in your tenant’s shoes. If you were to discover that your home was being sold out from under you, surely you would be upset or frightened. This is especially true if you had lived in the space for several years with a year-to-year lease. Remember that a tenant can do all sorts of things that might cause trouble for your sale, particularly if he runs to court to get an injunction against eviction.
This is precisely the type of situation that could scare off your buyer, regardless of the market. It might be in your interest to offer the tenant some financial incentive to “go quietly.” Perhaps that means paying for the tenant's moving costs, or finding him a broker. Perhaps that even means paying for his first month’s rent or security deposit in the new place. These expenses might seem gratuitous – perhaps several thousand dollars – but they are a small price to pay if they ensure that the overall sale goes off without a hitch.
You should also, for obvious reasons, inform prospective buyers of the existence of the tenant. Most courts will bind a buyer to the terms of the rental agreement that’s already in place, meaning that there is a decent chance that if the buyer takes possession before the notice time allotted in the lease, the buyer will be stuck with the tenant, under the terms of your lease or rental agreement, for some period of time.