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Rental property is often an investment that owners hope will give them a stream of income that will last for years, providing stability and paying rent that will cover the costs to build equity in the property. Unfortunately, things don’t always go that easily and landlords start to wonder how to evict bad tenants to sell a house.
Renters are notorious for not taking good care of the property. They are naturally not as invested in the home as an owner would be. Upkeep on the house and other trouble from a bad tenant can force a landlord’s hand.
Sometimes, selling a tenant occupied property is the best course of action for a property owner to recoup some of their money.
Dealing with a bad tenant
There are several different kinds of tenants. There are those that hum along, taking care of small repairs and paying their rent on time. These are the dream kind of tenants in a rental house. They always get their security deposit back because they take such good care of the property.
On the other end of the spectrum is the bad tenant. They don’t follow the terms of the lease agreement, they don’t pay rent on time, and they either constantly bother the landlord about small issues or leave the house in such a horrible state that the landlord must pay for repairs.
Many landlords find themselves struggling to collect rent and end up having to go through the eviction process to get even some part of their funds. It can be so bad that the landlord might decide that the best course of action is to sell the house with the tenant inside it.
The best solution is preemptive
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Struggling against bad tenants is difficult and it can be overwhelming. The best solution is to do the due diligence with all potential renters before anyone signs a contract. Make sure that they have good references and a stable source of income that will let them pay their rent on time each month.
The process of screening potential renters is always going to be easier than dealing with problems on the other side. The cost to go into small claims court and evict a tenant is much more cumbersome and difficult than doing the upfront process to screen potential renters.
Don’t accept the word of a potential renter about their past or their ability to pay their rent in the future. Ask that they provide documentation of everything through the application process.
Landlords trying to sell have a choice
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There are two ways to go about selling a rental house:
- Sell the house with the tenants still there
- Get rid of the tenants before you sell
What you’ll have to decide is whether you want to potentially go through the eviction process or whether you’d rather try to sell the house with the tenant still there. Both are real possibilities, and both have pros and cons.
Selling a house with a long term lease might be a dream come true for a new owner, especially if there is no back rent owed and the tenant does a great job of keeping the house maintained. Another landlord would be happy to buy this kind of house.
On the other hand, many tenants don’t take care of the property and get behind on their rent. In this case, the best bet is to try to get the tenant out of the house while following local laws. Instead of selling to a new landlord, you now have the option to sell the home as a primary residence through either a traditional real estate sale or through a cash home deal.
Tenant’s rights
Tenant’s rights are a substantive and important part of the conversation for anyone who is a landlord. Eviction is a last resort, even if someone is not paying their rent on time. Every state, from Florida to Michigan, has laws that protect tenants.
Don’t try to get around the local laws or the state and federal regulations that govern a given eviction process. You’ll have a much bigger issue to deal with if you don’t follow the law. Not only will it cost you more money, but you could find yourself in small claims court, and that’s a process no one wants to deal with.
Always look at the lease agreement closely before you start the eviction process. Most tenants would rather get out of the property, but if they want to stay put on the piece of real estate, then they will likely work with a tenants rights organization that will support their ability to keep being a tenant.
This is a time that you will want to consult a real estate attorney to make sure that you’re doing the right thing legally.
Landlord’s rights
Though we often hear about tenants rights, one of the things that is less in focus is the notion of landlords rights. In truth, the law does protect landlords just as it protects a tenant.
You have the right to sell your house fast whether there is a tenant living in or not. You also have the right to have your property taken care of in a reasonable way. There is not a blanket ability of the tenant to treat the property however they want to, and they of course cannot commit illegal actions on the property.
You are completely justified in putting the house on the market, despite the contract.
If you have concerns about what your rights are with the property and whether to accept the way that the current tenant is treating the property, always consult with a real estate attorney about your rights.
When the lease agreement is in effect
If a tenant still has time on the lease term or rental agreement, they can stay on the property unless they’ve done something that violates the lease agreement. If your tenant is not violating the agreement and the lease expiration is months away, then you might do better to at least try to sell the property with a current tenant.
A fixed term lease guarantees the right of the tenant to stay on the property through the end of the lease. You won’t be successful in getting them out of the property sooner unless there is an additional clause in the lease that allows you to break it early.
Keep in mind that even if you have a tenant’s agreement, you can always approach your tenant and tell them that you intend to sell the property sooner and that you’d like to end the lease or rental agreement sooner. There is no guarantee that they will leave, but it’s always worth it to ask before you pursue an eviction notice.
Things that can break a lease agreement
If your rental property has significant issues with the tenant doing damage to the home, you do have recourse to evict in most states.
Unless there is an early termination clause in the lease, there are only two things that can reasonably allow a landlord to break a lease and evict a tenant in most states.
- the tenant commits illegal activity on the property
- nonpayment of rent
Anything else that a tenant does on the property that is problematic won’t give a landlord grounds to evict. Even damage to the property has to be significant in order to rise to the level of breaking the lease. This would include things like making significant damage to the home.
If your lease does have an early termination clause, then you as the landlord have a way to follow the law and also get the tenant to vacate.
Problems that will keep potential buyers away
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Very few potential buyers are going to want to deal with a rental property that is in poor condition.
Significant issues with a tenant or a property can make a home unattractive for potential buyers who might take over the property. These include things like:
- constant evictions
- late rent payments
- disruptive tenants
- pest issues
- roofing problems
- structural issues
The old saying in real estate of “location, location, location” is also something to consider here. If the property is not in a desirable location and is surrounded by a neighborhood that might be a cause of concern, then selling the home with or without a tenant is going to require creative thinking.
You can almost always sell a house fast if you are willing to take a lower price for a cash offer, but that’s a financial choice that you’ll have to consider. It might well be worth it to just get out from under a bad house if you have tenant problems.
Can you avoid eviction and sell with tenants?
There is nothing preventing you from selling a house with tenants in it.
Keep in mind that the current lease you have with the tenant will transfer over to the new buyer, so that will have to be part of the negotiation process that you go through during the sale of the home. This adds a layer that all parties will have to deal with, but many buyers are looking for investment property.
If there is a bad tenant living in the home who has a history of problems, you may or may not be required to disclose the problems if you’ve been keeping track of them. Often, it’s best to disclose this information of your own accord, though in many states it’s a requirement of the sale process. Follow the state laws about what landlords have to disclose.
Also, make sure that you are not required to offer the current tenant first refusal on the sale of the home. Even if you’re dealing with a tenant who does not generally pay their rent on time or who has a history of mistreating the home, they could still be a potential buyer.
Showing a home with tenants
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Most lease agreements have a clause in them that allows the landlord to show the home as part of the sale process. Keep in mind that, though the tenant will be given notice of when potential buyers are coming to the property, that does not mean that they have to put the home in show condition.
The other option is offering money to the current tenant to get them to ready the home for sale. This could be in the form of reduced rent in exchange for cleaning up the property.
If you are set on selling a house with a tenant living there, you need to be ready to deal with making a fair share of repairs while they are there, which could be difficult. You’ll have to coordinate with a general contractor on large repairs, and a tenant might have to vacate the home for some of the work to be done.
Is it easy to sell a house with tenants?
Selling a house with someone living in it is not easy. Potential buyers will only be other investors or potential landlords who are willing to take on the complications associated with this new residence.
It’s not going to be easy to sell a house fast unless it has a month to month lease and you can get the tenant out quickly in order to facilitate the sale.
Eviction is a last resort
Though it might sound tempting to just send a notice and get the eviction going, you have to realize that the eviction process takes months and will ultimately slow down any home sale. If it’s difficult selling a house in the open market with a tenant living there, it’s much more difficult to sell when the home is in the eviction process. Looking for a potential buyer who will take the houses off your hands for a cash offer might be a better way to get out from under a challenging tenant. Buy houses companies can pay cash for homes and will help you to move on quickly, with or without a tenant in the home.
