Landlords: How to sell a tenanted property successfully
A smooth sale of a tenanted property protects the landlord, the buyer, and the tenant. The key is communication, legal compliance, and transparency from the start.
"When I manage this process correctly, it protects my client's relationship with their tenant even after the sale is complete," says Morné Prinsloo | Local Real Estate Agent in Roodepoort and Krugersdorp | REMAX Town and Country
"Selling a property while a tenant is in occupation is something I deal with regularly on the West Rand. Handled correctly, it does not have to be complicated. Handled poorly, it can damage the relationship with your tenant, delay the sale, and even reduce your final selling price. Here is what I advise landlords before we take a tenanted property to market," he says.
Know Your Legal Obligations Under the Rental Housing Act
A fixed-term lease does not end because the property has been sold. The lease agreement transfers to the new owner. A buyer purchasing a property with a tenant in place takes on the rights and obligations of the existing lease. This is non-negotiable and needs to be disclosed upfront to every prospective buyer.
If the lease is month-to-month, the landlord can provide written notice to the tenant in accordance with the lease terms, typically one calendar month. If it is a fixed-term lease, the tenant has the right to remain until the lease expires, regardless of the sale.
Have the Conversation with Your Tenant Early
"The worst thing a landlord can do is surprise a tenant with viewings. I always advise landlords to speak to their tenant before the property goes live. Explain what is happening, reassure them that their rights are protected, and ask for their cooperation with viewings.
"Tenants who feel respected are far more likely to keep the property presentable and allow viewings at reasonable times. Tenants who feel ambushed will make the process difficult, and I have seen this derail sales," he says.
Viewing Arrangements
The Rental Housing Act requires reasonable notice to a tenant before a landlord or their representative enters the property. Forty-eight hours written notice is standard practice. I always coordinate directly with the tenant to schedule viewings at times that suit them, not just times that suit buyers.
For show days, I discuss the plan with the tenant in advance and get their buy-in. Where a landlord has a good relationship with the tenant, some are willing to vacate the property for a show day if they are given enough notice and the property is left exactly as they found it.
Disclose the Lease to Buyers
Every buyer looking at a tenanted property needs to see the lease agreement and understand its terms before making an offer. This is a material fact about the property and must be disclosed. I include the tenancy details in the marketing information and confirm the lease end date in the OTP.
Some buyers specifically want a tenanted property for investment purposes. For them, seeing a signed lease and a rental income history is a positive. Others are buying to occupy and need to know when the property will be available. Clarity from the start avoids disputes later.
The Vacant Occupation Clause
If the buyer wants vacant occupation on transfer, the OTP must include a clause that makes the sale conditional on the tenant vacating by a specified date. The landlord needs to follow the correct legal process to achieve this, and it needs to be done before the OTP is signed, not after.
"I do not advise landlords to make promises about vacant occupation unless they are certain they can deliver it legally and within the required timeframe," says Prinsloo.
Original Article: https://www.property24.com/articles/landlords-how-to-sell-a-tenanted-property-successfully/33092