The Chicago Real Estate Minute

The struggle of selling a tenant-occupied property

4 minute read

Selling a tenant-occupied property is never easy, but perhaps now is the best time to do so. Challenges abound — it can be done, but only if every­thing goes perfectly.

The landlord-tenant relationship

Image by Gerd Altmann from Pixabay

Regardless of how stellar your com­mu­ni­ca­tion has been to this point, the fact that you are trying to sell the home they currently live in will inevitably have an effect. They’ve been living there, minding their own business, paying their rent, and not having their life inter­rupt­ed by their landlord. You’re now asking them to make several changes to their everyday lifestyle. In most sit­u­a­tions, this is within your legal rights to do, but it is imper­a­tive that you realize the dif­fer­ences (and some sim­i­lar­i­ties) between selling your own home and selling a tenant-occupied property.

The concerns most tenants have

With few if any excep­tions, a lease is a legal document designed to protect both parties — the landlord is promised to be paid for providing the place to live, and the tenant is guar­an­teed to have the legal right to live there until the end of the agreement. Nonetheless, many tenants often worry that they’ll be “kicked out of their place” during the lease, even if they don’t mention it to you.

As a landlord, you always have to be honest and upfront in your dealings with your tenant — therefore, I recommend you notify them of your plans to sell as soon as you know for sure and remind them of their rights as tenants and your rights as the landlord/seller.

What you can and can’t do

Legal respon­si­bil­i­ties may vary slightly from city to city, but most are pretty similar. The City of Chicago (per it’s Chicago Landlord-Tenant Ordinance) requires 48 hours notice be given to tenants in order to enter their leased premises. Less time is also possible if the tenant grants access.

Image by Alexas_Fotos from Pixabay

You can ask the tenant to clean the place, take out the trash and make their bed. If they’re packrats, you can also ask them to declutter the home. Just know that they’re under no legal require­ment to do so.

I’m not an attorney, but I have never seen a situation where you can tell them that you’re breaking the lease to sell the place. Telling them that you’ll be showing it outside estab­lished time­frames is off the list too, as is telling them that they need to change their décor or deper­son­al­ize the home. It’s still their home until the end of the lease.

Offer some possible incentives

Image by Gerd Altmann from Pixabay

One pos­si­bil­i­ty is to offer the tenant something in return for vol­un­tar­i­ly ending the lease early and/or keeping the place spotless. This would have to be by mutual agreement of course, but some may find a reduction in rent or other financial con­sid­er­a­tions highly moti­vat­ing.

Your still a seller — everything still applies

One of the biggest chal­lenges in selling a tenant-occupied property is that all the same “Must-Do’s” still apply. Remember, the potential buyers don’t care if a home is owner or tenant occupied, vacant, etc. — they just want to see homes.

Don’t forget — it’s just human nature

Image by C.M. Zijderveld from Pixabay

You may strike gold and have the perfect tenant — immac­u­late, never home, agreeable and flexible. Perhaps that’s been the case during their normal tenancy, but even the best of rela­tion­ships can get strained when selling enters the picture. As caring or congenial a tenant may be, it’s not the home that they own, so they naturally are just not going to care as much as you do about every aspect of getting the home sold. Don’t bemoan that fact, just realize it and make it part of your decision to sell or not sell while a tenant occupies the space.

Final word: Selling a tenant-occupied property

Selling in this situation is never ideal — either for the landlord or the tenant. The way to give yourself the best chance for a positive outcome is com­mu­ni­cat­ing often, thanking them for being quality tenants and helping you through this process, and not being demanding. Remember, you get more flies with honey than you do with vinegar.

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