Written by Emily Koelsch
With changing economic and market conditions, some Landlords are deciding to sell their rental property with Tenants in place. There are various reasons to do this – for example, wanting to take advantage of strong markets, needing cash for other opportunities, or no longer wanting to be a Landlord.
There are some distinct advantages and disadvantages to selling a property with Tenants in place. If you decide to buy or sell a property with Tenants, you must know and respect your Tenants’ rights.
To help you do that, here’s an overview of those Tenant rights and tips for making the process go smoothly.
Notice Requirements When Selling a Property With Tenants in Place
Tenants have a right to receive an official Notice of Sale of Property. This Notice should be detailed and include specifics about when you’re putting the property on the market, the notice Tenants will receive before showings, and any other Tenant rights or responsibilities.
When drafting this Notice, look at your Lease Agreement and state laws. Some states have specific timelines for when Landlords must give notice. Additionally, good Lease Agreements include language about Notice of Sale and Notice of Showings.
Here are some tips for drafting this Notice:
- Review your Lease and make sure you comply with all terms;
- Review state and local laws to ensure compliance with all requirements;
- Include as much detail as possible;
- Tell Tenants how much Notice you must give before showings;
- Discuss the Tenants’ rights and responsibilities;
- Encourage Tenants to contact you with any questions or concerns.
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The Lease Agreement Is Enforced Even if Ownership Changes
One of the most essential things for Landlords and Tenants to understand is that a fixed-term Lease Agreement remains in effect even if ownership changes. The Lease isn’t tied to the Landlord; instead, it remains with the property and is in full effect until the end of the Lease period.
Here are some Lease-related tips when selling a property.
- Tenants are understandably anxious when they hear that their home is being sold. To ease their concerns, let them know that their Lease terms won’t change.
- A strong Lease Agreement can make your home more attractive to investors. Investors are bound by the terms of the Lease. They’ll be more comfortable with a thorough, state-specific Lease Agreement.
- To protect your Tenant, put everything in writing. For example, if the Lease doesn’t include a Pet Addendum or address pets, the new owner could tell your Tenants their pets are not allowed. Add any needed Addendums to your Lease before selling the property.
- At the end of the Lease term, Tenants are entitled to their security deposit. At the time of the sale, Landlords should transfer the deposit and any accrued interest to the new owner.
Effectively Marketing & Selling a Property With Tenants in Place
Even with proper Notice and a good Lease, it can be tricky to sell an occupied rental property. The process is stressful for Tenants and presents uncertainty for buyers. Thankfully, there are some ways to make the process go smoothly.
With that in mind, here are some tips to help you market and sell an occupied rental.
- Make sure Tenants are current on rent. If Tenants are behind, it makes your property less attractive to investors.
- Offer incentives to encourage Tenants to be cooperative during the selling process. Tenants can help by keeping the property clean, leaving during showings, and staying current on rent. To encourage cooperation, consider offering incentives like gift cards to local restaurants, a night at a hotel during an open house, or a rent discount while the house is on the market.
- Communicate well with Tenants throughout the entire process. Good communication includes coordinating showings around their schedule. Ask your Tenants when it’s convenient to show the property and, whenever possible, schedule showings during these times.
- Even if you don’t plan to sell a property, your Lease should always include language about a Landlord’s right to sell a property.
- Tenants are not required to clean or prepare the property for showings. To ensure it’s in good condition, offer to have it professionally cleaned.
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Good Tenants and a strong Lease Agreement are key factors for selling your property with Tenants in place. Buyers need to feel comfortable that they won’t have Tenant headaches. When there’s a thorough Lease and the property’s in good condition, the buyer has peace of mind that they’re inheriting quality Tenants.
Visit ezLandlordForms.com to customize a Notice of Sale, create Addendums for your current Lease Agreement, or build a state-specific Lease Agreement.
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Source: Rental Housing Journal
Small move sizes by renters are predicted to grow in 2024 mostly because the ratio of rental moves and homeowner moves changed.
A full 50% of moves in 2024 will be renters with small move sizes, predicts one report based on moving company request trends.
Looking ahead to the warm weather moving season’s busiest months, the report notes that “people who own homes aren’t moving. Only renters are moving. And renters have a lot less stuff.
So, in 2023, we saw the average move size drop by about 30%. Mostly because the ratio of rental moves and homeowner moves changed. So, we’ll continue to see rental moves make up a big portion of 2024 moves.”
The report‘s predictions are based on user behavior — when movers submit requests, interest in those destinations and sizes of moves are logged. If the trend continues, rentals will reign, and small-size movers will take a larger and larger percentage of overall moves this year.
Why? And what does that mean? We’ll dig into some factors we think are behind the trend.
What are the Reasons Behind the Small-Move Rental Boom?
1. It’s Easier to Move a Rental Household
Typically, renters have fewer items to move than owners. That makes them more likely to relocate than owners, who might have decades’ worth of possessions tucked into garages, basements, and attics. It makes renters more mobile than owners.
Owners have social and psychological reasons to stay put, too. They may be ensconced in their communities, from schools to places of worship and city councils.
In fact, one study showed renters were three times more likely than owners to have moved recently.
But that doesn’t explain why this year’s renters are taking an even larger share of the pie. Or does it?
2. The Current Job Market Favors Relocators
When it’s easier to move without having to find a new job, more and more renters who are thinking about relocation are likely to jump in.
Long-distance moves continued to accelerate through 2023 as jobseekers looked outside their own cities in search of affordable housing and better quality of life. The remote-work renaissance during pandemic shut-downs made that possible, and it shows no signs of slowing years after lockdowns.
Some even say that return-to-office “died” in 2023, so workers may be feeling bolder that their jobs will accommodate new moves.
Because renters can pick up and move more easily with smaller move sizes, more small-move relocators get in on the trend.
3. Interest Rates Are High
At the same time, large move sizes (belonging to more homeowner moves) are stagnating.
While current interest rates can’t compete with their high 1990s counterparts, they’re still high compared to anything prospective homeowners have seen in the last two decades. That’s put a damper on home buying and it has encouraged owners who are moving to consider renting in their new location until rates come down.
With some speculation that this could happen by the end of the year, homeowners are more likely to put off moving for one more year, while renters face no such obstacles. They can move now, and many are.
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4. Pricing Pressures
Recent inflation on everything from food to consumer goods, coupled with an ongoing housing shortage that’s been driving prices upward, has put pressure on renters to move. According to one survey, 56% of renters said they felt pressure to move in order to seek relief from increasing rents.
And, as prices rise, renters who have a mobility advantage can look outside their home cities for a discount. With remote jobs, they’re even more likely to do so.
The result? Renters are less likely than ever before to ask themselves if lower-rent regions are “worth it.” Of course they are! They can increasingly keep their jobs anywhere in the country while saving more — and maybe even increasing the likelihood that they become homeowners in the future.
In a world where renters can work just as much, but save more and live larger in a potentially safer, cleaner location closer to nature, why wouldn’t they?
What Does the Rental Move Boom Mean for Renters?
More moves, more renters, and smaller move sizes?
Is that positive or negative? As housing transactions fall, demand for rental units necessarily rises, benefitting landlords. That small-size rental moves are grabbing a bigger share of the moving pie also predicts strong demand for rental properties, rising rates and competition for units.
However, there are benefits for renters that come with the trend toward smaller move sizes:
- Focus on tenant satisfaction: As landlords try to keep down the high turnover that comes from more moves, they’re more likely to seek out stable tenants who they feel will stay long-term. That means more focus on tenant satisfaction and retention, with more responsive property management, on-point maintenance, and timely communication.
- Greater flexibility: More small moves and higher mobility may pressure unit owners to offer more flexible lease terms, as renters increasingly value the freedom to move. Landlords can attract a broader pool of tenants when they offer more flexibility in housing terms.
- Amenities rule: Tenants will be increasingly able to seek out properties near transportation or with lifestyle amenities from fishing ponds to crystal lagoons, car-free thoroughfares, and more. After all, they’re often moving to increase their quality of life. Appealing to these renters may mean the market increasingly bends toward differentiating their properties and making them lifestyle destinations.
- Moving becomes more about location, location, location: Renters may find it more difficult to move to neighborhoods in high demand for their high quality-of-life amenities, access to culture, and accessible transportation. These hot spots should see increasing applications for new moves.
Small Moves Will Reign in 2024
While some landlords fear a rental market crash in 2024, the reality is far more nuanced. In fact, demand for rental housing stands to rise, with prices predicted to increase 1.5% in 2024. New supply is actually putting the brakes on the rental market, not a lack of movers.
Landlords can take heart from moveBuddha’s data that shows an increase in the market share of small-size moves, as they predict high move intent from renters throughout the 2024 moving season. But renters have plenty to celebrate, too.
The biggest takeaway?
The era of moving to “Zoom towns” is not over, as more and more renters recognize that it’s not the time to buy, and that they won’t lose their existing jobs if they opt for new rental digs. Renters who can harness the demand for these moves stand to gain in 2024.
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Article provided by Fair Housing Institute
It’s simply a part of any property; your residents aren’t always going to agree. This makes conflict inevitable, but the key turning point is when it turns into bullying and harassment. To be clear, the Fair Housing Act states that resident bullying and harassment cannot be tolerated. Are you sure that your property, as a whole, has the best practices in place when it comes to resident bullying and harassment? Let’s go over four key points that occur during this situation and highlight best practices for each.
Best Practice: Proper Training for Staff
Your staff members typically have the most contact with your residents. They’re the listening ear and first point of contact for many issues, including incidents of harassment and bullying. So, what if your staff member witnesses a case of resident bullying?
First and foremost, any member of staff who is not involved with management should not get involved in the situation in any way. This is because not all staff members will have the training to discern a personality conflict from a conflict based on a protected category/class.
The training you should invest in for all staff members is twofold: incident reaction and documentation. Training all staff members to stay a witness to an incident involving resident bullying and harassment is your first step. The next steps are to ensure everyone understands how to document the witnessed occurrence properly. Any little detail missed can impact management’s investigation of the incident.
Best Practice: Incident Documentation
So, a staff member has witnessed and documented a conflict between two residents that they perceived to be bullying and/or harassment. What are management’s next steps? Along the same lines as staff members training, ensure every step you take is documented well when following up on the reported incident.
Your first important step is to establish that there is bullying and/or harassment taking place between the residents. If there is enough evidence found to support this claim, you cannot hesitate to launch an investigation. Why is this?
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Best Practice: No Investigation Hesitation
The most important answer to the above question is quite simple: investigation hesitation can lead to a violation of the Fair Housing Act. It is illegal for harassment to persist with no action on behalf of the housing provider.
As a follow-up answer, the housing provider will almost always be the focus of the legal case if a court investigation is launched. This is based on the fact that the housing provider is operating as an asset of a property management company, therefore, they have more money to pay in a settlement, as opposed to an individual who was the cause of the bullying. In summary, if you want to avoid a pricey settlement on top of a violation fine, it’s best that you launch an investigation as soon as it has been proven harassment is taking place.
Best Practice: Zero Tolerance Policy
Once you have your documentation in place, from the incident report to the investigation, it is up to management to issue consequential action. Bullying and harassment are not only against the Fair Housing Act but also a violation of the resident’s lease.
So, depending on the severity of the situation, a lease violation or termination can be issued. A zero-tolerance for bullying and harassment policy can also be installed as part of your property for further proof of a decision made by management.
In conclusion, situations of harassment and bullying will occur on any property. And they’re tough incidents to deal with. In any case, remember the discussed best practices: ensure your staff is properly trained, incident documentation is as thorough as possible, don’t give in to investigation hesitation, and consider a zero-tolerance policy.
Above all else, remember the Fair Housing Act is against bullying and harassment of any kind. So, ensure you’re following through on your responsibility to uphold and abide by its laws.
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