How to Sell an Occupied House with Tenants in Pennsylvania
Investing in property is a smart strategy for achieving financial security. Scoring a great deal and either flipping it for profit or renting it out while property values appreciate can result in substantial returns.
However, property investment can become more challenging when obstacles arise that may delay your financial goals—such as tenants living in the property.
Once you rent out your property, your tenants become an important factor in its future. The very tenants who helped you maintain that investment might also complicate your plans to sell when the time comes.
Fortunately, there are effective ways to manage the tenant-landlord relationship during this process. Keep reading for valuable tips on how to sell a property with tenants still residing in it.
Can You Sell an Occupied House With Tenants In Pennsylvania State?
The short answer is yes, you can sell a house occupied by tenants in Pennsylvania. While there are exceptions depending on your location, tenants in Pennsylvania generally have the right to remain in the property until their lease expires. This means you cannot illegally evict them or use unethical tactics to force them out before their lease term ends.
However, it’s still your property, and you have the right to sell it if you choose. As long as you respect and comply with your tenant’s rights, selling the property with occupants is entirely possible.
That said, there are some complex logistics involved. It’s crucial to review local Pennsylvania tenant rights ordinances to ensure you don’t inadvertently violate any laws.
Maintaining a positive landlord-tenant relationship is also important, especially if you plan to stay in the real estate market long-term or simply want to avoid unnecessary conflicts. With that in mind, having an open conversation with your tenant about your intention to sell should be your first step.
Your tenant might be open to moving out before their lease is up, or they might explain why it’s not a good time for them. Either way, the option to sell remains available, and clear communication with your tenant can help you make informed decisions that save you time and trouble down the line.
Additionally, it’s essential to carefully review your lease agreement. In cases of long-term tenancy, there might be clauses—either in your favor or the tenant’s—that you’ve overlooked. Even if local housing laws permit you to sell, a specific lease provision might restrict you from doing so. Always double-check the lease before making any significant decisions.
How to Sell an Occupied House With Tenants In Pennsylvania
As mentioned earlier, the lease agreement plays a crucial role in determining your options when selling a rental property with tenants.
Different types of leases, such as fixed-term and month-to-month, offer different approaches to selling the property. Each type of lease presents unique opportunities and challenges, so it’s important to understand the specific terms of your agreement before deciding on the best course of action.
Pennsylvania Tenants With Fixed-Term Leases
Selling an occupied home is often more straightforward when the tenants are on fixed-term leases.
In this scenario, you have two primary options: you can wait until the lease expires before selling, or you can sell the property to a buyer who is willing to assume the existing lease and take on the tenants. The type of buyer you attract can also influence how the situation unfolds. For instance, an investor might see the occupied property as an advantage, while a traditional homebuyer might prefer a vacant home.
A) Wait Until the Lease Is Up to Sell
Delaying your plans to sell until the tenant’s current lease expires is often the simplest and most straightforward solution.
While your tenant may feel frustrated or disappointed if they were hoping to renew the lease, they have no legal grounds to prevent you from selling the property once the lease term ends. At the conclusion of the lease, your contractual obligation to the tenant is fulfilled.
From a logistical standpoint, waiting until the lease is up can also make the selling process smoother. You’ll avoid the stress of coordinating repairs and property showings around the tenant’s schedule. Additionally, keeping the property in show-ready condition is much easier without someone living there.
Tenants, whether intentionally or not, can complicate a sale. By waiting until the lease ends and your responsibilities toward the tenant are fully met, you eliminate many potential obstacles in the real estate process.
B) List With Tenants in Place
People’s circumstances and timelines can change unexpectedly, yours included. There are various reasons why you might not want—or be able—to wait until the lease expires to sell the property, and you may need to act quickly.
Selling during the lease term doesn’t mean you’re breaking any rules or treating your tenants unfairly. It simply means that your situation, for whatever reason, requires a more immediate transfer of property ownership.
While listing a property with tenants still residing there is more complex than selling an empty home, it is a viable option that can meet your needs while respecting the rights of your tenants.
However, be prepared for the possibility that your tenant may have concerns or an adverse reaction to the decision. They might worry about how the sale will affect their future tenancy, such as a potential rent increase or uncertainty about whether the new owner will renew their lease. They may also have concerns about privacy during showings or fear being held responsible for any damage to the property.
Despite their concerns, your reasons for expediting the sale are likely valid and pressing. Open and honest communication with your tenant about your needs and the reasons for listing the property can go a long way in easing tensions and preventing more significant issues from arising.
C) Sell to a Pennsylvania Cash Buyer Directly
Another important factor to consider is your ideal buyer. If you know that your buyer intends to continue using the property as a rental, this could help alleviate some of your tenant’s concerns.
Additionally, selling directly to a cash buyer can simplify the process and reduce much of the red tape that often frustrates tenants, such as numerous inspections and assessments involving people coming through their space.
With a cash buyer, like Direct Home Buyers, the only change your tenant might notice is the name on the check they write each month. This streamlined approach can make the transition smoother for everyone involved.
Tenants with Month-to-Month Leases
Unfortunately, when the tenant has a month-to-month lease, your options are a little messier for getting the go-ahead to put your house on the market. What options you do have, however, are listed here.
A) Renegotiate
There’s no expiration date on the lease, which means you have to actively come to an agreed conclusion on it with the tenant. You’ll have to renegotiate the terms, likely with some added benefit to the tenant, which could get costly and time-consuming for you.
Reduced rent or a couple of subsidized months usually do the trick as good incentives and commonly done ways to functionally “buy out” the tenant from their lease.
B) Terminate
Alternatively, depending on the state or region, you might be able to terminate the lease. Although some rent-controlled cities and states vary on this, in most places, no specific reason is necessary for the landlord to terminate a month-to-month lease, so long as you aren’t acting on housing discrimination.
You’ll want to make sure you still follow the proper protocol for terminating a lease, though, which always involves a minimum required amount of notice (e.g., the thirty-day notice standard). Even the fastest, most direct cash sales usually take longer than thirty days to close, so this should still leave plenty of time for you to sell and your tenant to find new housing.
You also might have to serve the termination notice in a specific font and typeface or on specially formatted letterhead. Be sure to consult your area’s statutes or else risk a deficient termination notice that doesn’t hold up in court.
What to Do if Your Tenants Don’t Want to Leave?
The reality is, no matter how much communication you strive for with your tenants, they might still be very resistant to leaving. They might like the school district, be unable to afford moving costs, have relatives nearby who need them in proximity…the list goes on.
You should expect at least some amount of resistance when broaching the topic of moving to your tenants.
Like anything else, communicating with them might solve a lot of the hesitancy. Here are some suggestions on options you can offer to your tenants in light of a move.
Offer to Sell to Them First
The house is your property, but it’s also their home. Your tenants might have developed an attachment to the place, especially if they have lived there for a long time. Whether it be for reasons related to family, finances, location, or otherwise, the fact of the matter is that the house works for them in ways that other houses don’t.
This history actually makes your tenants the perfect candidates to buy the property themselves, in many cases. It saves them the headache of looking for a new place and paying for moving costs, and it saves you the expense of going through more formal listing procedures. Win-win.
If they aren’t financially able to purchase right away but expect to be in the future, there are rent-to-own or owner financing options. These financing options would give them the time to raise credit or cash for a loan while still providing you with a reliable buyer.
Offer an Incentive
Your tenant might be willing to move—with the right nudge. If they see the move as something that could benefit them financially, their level of cooperation will likely improve.
There are many inventive options out there to help sweeten the deal. Letting them out of the last month’s rent, offering to pay for the first month somewhere else, or reducing the current rental amount are great ways to get them on board.
Their reason for being disgruntled about the sale might also come from the hassle of you showing the house. In this scenario, you could offer to pay for a professional cleaning service or compensate them for the time they have to be out of the apartment.
Your tenant will likely be a lot more cooperative if the burden of the selling process isn’t falling on their shoulders.
What to Do if Your Tenants Are Causing Trouble In Pennsylvania?
It’s challenging to avoid conflict entirely when asking tenants to move, especially if they’re resistant to the idea.
However, if your tenants are actively causing disruptions to hinder the sale—particularly if they’re engaging in criminal activity—you may have legal grounds to terminate the lease outright. If their behavior violates the terms of the lease agreement, such as causing intentional property damage or withholding rent, you have the right to break the lease legally.
That said, this doesn’t mean you should actively search for reasons to evict your tenants. But if there are clear and significant violations, you are not obligated to allow them to remain until the lease term ends. Taking action in such cases can protect your property and help facilitate a smoother sale process.
Conclusion
Selling a property with tenants in place is always a bit more complicated. Just because you’re ready to sell doesn’t mean your tenants are prepared to pack up and move.
However, there are several strategies you can employ to make the transition smoother and beneficial for everyone involved. These might include renegotiating lease terms, offering incentives for the tenant to move out early, or—ideally—finding a buyer who is willing to honor the existing lease.
Regardless of the approach you choose, open communication with your tenant from the outset is essential to maintaining their trust and ensuring their cooperation throughout the process.