As a landlord, you’re happy to have tenants living in your property, that is until it’s time to sell your Long Island house. There are quite a few things that can derail your plans to sell, especially when tenants are involved. Unless you’re flexible or have luck on your side, your selling schedule usually doesn’t match the dates on your tenant’s lease perfectly and it may seem tough to sell a property with tenants.
“Can I sell a home with tenants” is a question we get all the time. When I started in this business, I never expected this situation to be as popular as it is, but after buying homes on Long Island for years, and having some rentals of my own, I have come across this quite frequently. This has become even more popular in 2020 with the moratorium on evictions and the financial distress that both tenants and landlords are experiencing as a result of COVID-19.
When it comes to selling a tenant-occupied property, you do have options. And the good news is, you don’t have to wait until the property is vacant before putting a for sale sign in the yard. One option is to put the property on the market while your tenants are still there. But many buyers will not be interested in buying a property that comes with tenants attached. Selling a house is stressful enough; the last thing you need to do is have tenants interfering with the sale of your property.
So to help navigate selling a property with tenants, check out these helpful tips.
Things To Consider When Selling A Property With Tenants On Long Island
Tip #1: Know Your Rights As A Landlord
If you are going to sell your house with tenants, it’s wise to be aware of landlord and tenant rights when selling your property. State rules and regulations vary, so take some time to research New York landlord-tenant laws for your Long Island home.
Regardless of legal requirements, you should notify your tenants as soon as possible. That way, they can start making arrangements to find a new residence and you can ensure a smooth and coordinated departure from the home. After all, you’ll need some cooperation from the tenant if you want to achieve top dollar. For example, you may ask them or help them clean up the apartment so it will show better to prospective buyers.
Tip #2: Communicate With Your Tenants
Make a point to keep your tenants updated. They likely will have questions about the process, so provide as many details as you can upfront. Let them know ASAP precisely when the property will be placed on the market.
If you are planning to show the home, make sure to notify your tenants well in advance. Surprisingly some states have laws that regulate showings, so do your research. If you would like your tenants to make preparations for showings such as cleaning, making sure pets are created or leaving the property during the showing, etc. make sure to do so in writing.
What If I Don’t Want to Deal with the Tenant?
We hear this issue most commonly in a situation where the tenant is a family member [or friend] and the owner does not want to be the one to kick out a member of their family. Oftentimes there is some history to the relationship between the two parties which can complicate the conversation – perhaps the owner feels like they have been doing a favor for the tenant or that the tenant has not been pulling their weight on the rent payments. If you don’t want to be the “bad guy” and be the one to communicate to the family member you are putting the house on the market, you may want to pursue a cash sale and sell the property with a tenant to an investor who will deal with the tenant so you don’t have to.
Tip #3: Check The Terms and Expiration Of Your Tenant’s Lease
Typically there are two types of lease term agreements:
- Month to month
- Fixed-term lease
Month to Month
A month-to-month lease is ideal for landlords who wish to sell. Typically this type of lease offers the most flexible rental situation.
Keep in mind though that even with a month-to-month lease, a landlord cannot end a tenancy early without cause. If the landlord does not have reason to evict, then the landlord must wait until the end of the lease or rental period before asking or expecting the tenant to move. Still, it would be wise to give the tenant notice so that they may be more cooperative about home showings and moving out.
In New York, if a tenant has a month-to-month lease or rental agreement and the landlord does not have cause to terminate the lease early, then the landlord must give the tenant notice as follows:
- Tenants occupying for a year or having a lease of at least one year: 30 days’ notice.
- Tenants occupying from one to two years and leaseholders of one to two-year leases: 60 days’ notice.
- Tenants occupying more than two years or having leases of two years or more: 90 days’ notice.
However, when you notify the tenant to vacate due to a sale, follow the terms of their lease as they detail when the agreement ends. To verify this is being done legally, seeking the advice of a lawyer would be wise since they would be familiar with the current rules and regulations of eviction in the state of New York.
Fixed-Term Lease
A fixed-term lease isn’t as flexible as a month to month lease. If the contract doesn’t have an early termination clause and tenants are paying on time without violating terms, you likely will have to wait until the lease expires, even if that means delaying your plans to sell.
In New York, once the term ends, the landlord does not need to give the tenant notice to move, unless the terms of the lease require the landlord to do so. So the landlord can expect the tenant to move out of the home at the end of the term -unless the tenant has indicated otherwise, such as by asking for a lease renewal. Consulting with a lawyer would be recommended to go over your fixed-term lease agreement and to explain the rules for landlords specifically in Long Island.
Ultimately, if your tenants are following the rules, you can’t kick them out just because you’re ready to sell.
Tip #4: Be Familiar With The Eviction Laws For Your State
What happens when your selling time doesn’t mesh with your tenants’ rental contract? You are probably wondering if you can evict a tenant to sell your rental property. In most situations, you can not legally evict a tenant to sell the home unless it is spelled out in the lease agreement.
Many landlords use a standard form or template for the lease, if you did too, check out the language regarding eviction, or selling the property. Standard contracts often include language explaining the specific time required to give an eviction notice in case of a sale, typically 30 to 60 days.
Make sure to check state and local laws for any regulations governing eviction in case of a home sale. For example, some cities have rent control ordinances that want landlords to prove they have just cause (legally recognized reason for eviction) to evict. Because of the current pandemic, recent changes have been made so be also wary about the changes in eviction in New York.
Notify your tenants as soon as you can. Being upfront with tenants and sharing information will likely make them feel like cooperating with you.
Tip #5: Give Your Tenants A Notice To Vacate Due To Sale 
You should notify the tenant with an intent to sell letter. The letter offers a straightforward way to both let the tenant know about your plans to sell and provide relevant information.
When creating an intent letter to a tenant about the upcoming sale of your property, the notification should include:
- Identifying information, including the property address, tenant name(s), and date
- A brief explanation of what is going on with the sale of the property, such as the anticipated date it will be listed.
- Protocol for showings-whether there will be showings and, if so, detailed expectations for the tenant (straighten up the house, do the dishes, put the dogs in a crate, etc.) as well as yourself (“I will provide X hours of notice by text/call/email before the showing”)
Can I Sell a Property with the Tenant?
Assuming the suggestions above for a traditional sale are not an option or you may be dealing with a difficult tenant who will not leave voluntarily, you still have some additional options.
1) Eviction
The most obvious path to dealing with a difficult tenant on Long Island is to evict them, however, this is easier said than done as eviction is a particularly long process in New York during normal times. Evictions on Long Island have been known to take up to 12 months and with new legislation that was passed in 2019 called the New York Tenant Protection Act, a court may stay (delay) an eviction for up to 12 months if a tenant can prove “extreme hardship.” Of course, you, as the landlord, must continue to make your mortgage, tax, and insurance payments so you don’t lose the house while you fight the difficult tenant in court – this can be a huge burden that you are forced to shoulder.
Note: As of the time of this post (October 2020), eviction courts are not processing many cases, a backlog of cases is building, and I have heard estimates from attorneys of 12+ months before new cases will be heard.
2) Cash for Keys
While it may be hard to stomach, one of the options that is often used by investors like ourselves is what’s called “cash for keys.” As crazy as this sounds, this means actually paying the difficult tenant [who owes you overdue rent] to leave. You structure the arrangement so that if the tenant leaves the property in its current condition and leaves by a certain date, they will receive some amount of money. This is often in the range of $1,000 – $10,000 and is hopefully enough to incentivize them to leave rather than fighting a long, drawn-out eviction in court that will end up leaving you with many months of uncollected rent.
When we speak with landlords that call us who are dealing with a difficult tenant that won’t leave, we always present this as an option. However, we understand that for many sellers, this has become emotional and 99% of the people we speak with in this situation say something along the lines of, “Why would I pay them, they should have been the ones paying me!” Sometimes you need to look past the emotional aspects of this arrangement and do what makes the most sense for you financially, long term.
3) Selling with the Tenant
Your last option is selling the property to someone willing to buy it with the difficult tenant. When selling a house with a tenant, your buyer pool is limited since most buyers in the housing market are looking for a home they can occupy themselves. When selling with a difficult or non-paying tenant, the buyer pool is even smaller, since most landlord investors do not want to take on that burden and risk. Additionally, the property will not qualify for any bank financing with the non-paying tenant so it limits the buyer pool to only those people that have the ability to buy houses with cash.
However, the easiest solution by far is to sell your Long Island house to Leave the Key Homebuyers with the tenants in place. Leave the Key Homebuyers will make an all-cash offer, taking your renters off your hands so you don’t have to deal with the hassle and stress of selling a property with tenants. We buy houses on Long Island fast and can close even if your property has tenants.
Best of all, selling to Leave the Key Homebuyers means you’ll sell your house faster and easier. You don’t have to make any upgrades or repairs and don’t have to worry about inspections and appraisals. There’s no staging (or even cleaning!) involved. Leave the Key Homebuyers will make you a firm offer and purchase the house as-is, including tenants, and can close in as little as a week.
If you are considering selling your Long Island rental property, give Leave the Key Homebuyers a call today.