Before Selling My House, Can I Evict My Tenant?

If you own a home or property that you plan to sell, but where a tenant currently lives (with an annual lease), how can you successfully do so? Most landlords in this position hope to evict the tenant or otherwise convince them to leave. But there are legal limitations, as discussed here. You'll want to:

• see what your lease agreement says about pre-sale evictions
• research state and local laws about pre-sale evictions
• notify the tenant of your plans to sell
• consider offering a financial incentive for the tenant to leave, and
• if it turns out you can't evict, advise prospective buyers.

Check Your Lease Agreement for Restrictions on Pre-Sale Evictions

Start by reviewing 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 do, there is likely some language within it that addresses how many 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.

Check State and Local Laws for Restrictions on Pre-Sale Evictions

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 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 might have additional grounds for evicting your tenant, 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.

Notifying the Tenant of Your Plans to Sell

If you are already to the point of having found your buyer, and eviction is permitted after following the notice-requirement language in your lease; or perhaps under state or local law; 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 so on).

This is valuable time that the tenant will need in order to get their affairs in order; namely, look for another home and move.

If you haven't yet found a buyer, you might 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. 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 the tenant 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.

Consider Offering a Financial Incentive for Tenant's Departure

It might be in your interest to offer the tenant some money to "go quietly." Perhaps that means paying for the tenant's moving costs, or finding a rental broker. Perhaps that even means paying for the tenant's first month's rent or security deposit in the new place. Even paying several thousand dollars could be worth it to ensure that the sale goes off without a hitch.

If No Eviction Is Possible, Inform Prospective Buyers

You should also, for obvious as well as legal reasons, inform prospective buyers of the existence of a tenant who won't be departing. (Learn about seller disclosure requirements.) 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.