Selling any type of property can be complicated, but even more so when you’re dealing with a rental property with tenants currently living in it. A tenant can make or break your sale, so you want to make sure you do everything right.
Regardless of your reason to sell a house with tenants in Colorado Springs, here is everything you need to know to make the sale without creating a civil war with your tenant.
Identify Your Rental Situation
The first step is identifying the type of rental agreement you have with your tenant. Generally, there are two main types of rental agreements: month-to-month and Fixed-term leases.
Month-to-Month Agreement
If you’re dealing with a month-to-month contract, you can sell the house easily as long as you give the proper notice. According to Colorado’s State Laws, as long as you notify your tenant in writing at least 21 days in advance, you’re good to go.
Fixed-Term Lease
However, if your tenants are under a signed fixed-term lease, you’ll have to consider the following options:
Wait for the Lease to Expire
The easiest way to proceed with a fixed-term lease is to wait for the contract to expire so your tenant can move out. While this can take months, waiting for the home to be empty has its benefits. You’ll be able to make any necessary repairs, upgrades, or renovations without worrying about people inside the house. Also, preparing, staging, and showing your home will be a lot easier.
If you’re unable to wait for the lease to expire, you can always check if your tenant has violated any lease terms, allowing you to terminate it sooner. Valid reasons for early lease termination can include:
- Failing to pay rent
- Violating a no-pet clause, if applicable
- Subleasing, if prohibited
- Causing serious property damage
- Engaging in illegal activities inside the property
Once you’ve confirmed any of these scenarios, you can proceed to terminate the lease quickly with the proper notice.
Sell the Property as an Active Lease
In most state laws, when a leased property gets sold, the lease and security deposit are transferred with the property, so the new owner becomes the landlord. However, this can limit your prospects as you would need to find someone who accepts the lease terms and is willing to continue renting the property to the tenant.
Negotiate With Your Tenant
If you’ve found yourself a prospective buyer and you need to vacate the property as soon as possible, you may need to negotiate with your tenant to get them out before the lease expires. If your tenant is open to negotiation, you can offer the following options.
- Pay the difference: Check for nearby properties that are for rent and offer to pay the difference for the new monthly rent. You can take the number of months they have left in their lease and multiply it by the difference in rent cost with the new home.
- Pay moving costs: To show consideration for the inconvenience you’re causing by making them move out early, you can offer to pay for their moving expenses.
- Pay the security deposit: To incentivize them to move into a new place, you can offer to pay them the security deposit and first month of rent for their new home.
It’s important to keep in mind that your tenant is in no way obligated to accept your offer. If they decline, you’ll have to wait until the lease ends to sell the property.
Sell to Your Tenant
If all else fails, you can always try to sell the property directly to your tenant. You can offer them a seller financing agreement, where they can make short-term payments until they pay off the property.
Tips to Ensure a Smooth Sale
One of the most important things to keep in mind when selling a house with tenants is that communication is key. Make sure you talk with your tenant and work hand in hand with them to make the process as smooth as possible for both parties. You’ll also want to stay informed about your state’s laws regarding leases and tenant’s rights. You can do your own research or work with a professional who is familiar with these laws.
We Buy Homes in Colorado Springs
If you’re thinking, “I need to sell my house fast for cash” or “I need to sell my house without an agent,” Colorado Cash For Keys is your solution. We’ll guide you through the entire process to make it as hassle-free as possible for you and your tenant. Forget about paying additional fees, commissions, or spending money on repairs. We’ll buy your home as-is and get you the fair cash offer you deserve.