The Landlord Is Selling the House. What Happens to the Tenants?
When a person owns a multi-family house, and decides to put it on the market for sale, there are three people who are affected by the potential sale of the property: the seller, the buyer, and the tenants.
A question that I have been asked many times by both potential buyers and tenants alike is: What happens to the tenants? Do they(we)have to stay? Do they(we) have to move?
There are many different answers to these two questions. What the answer is for every specific buyer, and for every specific tenant, is dependent on a number of factors. Let's start out by addressing the most important factor: the lease. In Connecticut, leases convey with the property. In other words, when the closing has taken place and the deed and title have been transferred to the purchaser, the new owner is now responsible for upholding the terms of the lease applicable to the owner.
That is not the end of the story.The needs/objectives of the buyer in purchasing the property are a substantial factor in determining what happens to the tenants, as is the tenant's rental history with the previous owner. Many times, when a purchaser of multi-family homes is looking for already occupied properties to buy, they are looking for investment income. The previous owner should provide a rent roll to the potential buyer, so that the potential buyer knows how much income is generated by the property, as well as what the expenses of the property are (taxes, insurance, etc.). Such a buyer may opt to utilize a company that provides background reports on current and potential tenants, or question the current owner's motivations for selling. Any answers that reveal problematic tenant(s) may be grounds for the new owner to submit a notice to quit possession of a unit. Also, if the new owner is looking to live in the property, and have additional income coming in to assist with paying the mortgage and taxes, depending on the number of units in the property being purchased and their level of occupancy, one or more units may be given a notice to quit possession. If none of the above applies, and the current tenants are in good standing with the previous owner, the new owner may decide to keep and renew the leases, once the renewal dates have arrived.
Because of the uncertainty that the sale of a multi-family home generates among tenants, many sellers advise their tenants of their plans to sell and to start looking for another place. That is practical, when both the seller(s) and the tenants have been told what the potential new owner's plans are. It is also wise when neither the current owner or the tenants know what is going to happen, because it at least gives the tenant some peace of mind knowing that whatever happens, they will have a place to live.
Courtesy of William James Walton, Sr. , Realtor, WEICHERT, REALTORS® - Briotti Group
Serving northern New Haven and southeastern Litchfield Counties (Waterbury, Wolcott, Prospect, Naugatuck, Middlebury, Southbury, Watertown, Thomaston and Plymouth)
Call William James Walton, Sr. Real Estate Agent with WEICHERT, REALTORS® - Briotti Group (203) 558-7463 for help with your real estate needs -buying or selling - in Waterbury, Watertown, Wolcott, Middlebury, Southbury, Prospect, Naugatuck, Plymouth and Thomaston