Selling a Georgia Home with a Tenant Occupying

When tenants are occupying, the work on the front end is even greater and there are some special duties on the back end as well. It’s crucial that the seller’s understand that they have three options under this circumstance:

1. List the property with the tenant occupying and sell subject to the lease. If listing while the tenants are occupying, a written understanding of expectations should be achieved for both seller and tenants. How will showing be conducted?  Will there be a lock box on the door, a sign in the yard, and flyers on display? Will there be open houses conducted? How’s the Tenant’s mindset about all of this? What if the buyer prospects want to do an inspection and appraisers want to come inside for an extended duration? Expectations need to be set, understood, and agreed to up front.  If they are not, there will be problems.  Promise!
    
2. Invoke the early termination clause in the lease and list per those terms. If the lease is to be terminated early, how will the tenant’s react? What will be their frame of mind?  If they are unhappy about having to move early and intolerant about the showing process, it can prove to be disastrous.
    
3. Wait until the lease expires per agreement before listing and in accordance with lease terms. The safest solution is to wait until the lease terminates, and then put it on the market. You might list it during the final days or months (depending upon lease language) but even in this circumstance, non-cooperative tenants can rain heavily on the party.

If the property is sold subject to the lease, be prepared to include in the sales contract terms for dealing with rent collections, security deposits, and ongoing maintenance issues. Maintenance does not stop because of a sales contract. Who should be contracting for repairs during the pending stage of the contract? Do you need lien waivers for work in progress or invoices not yet paid? The buyer is going to want a copy of the tenant ledger, either at or before closing. All ongoing processes must be handed over in a tidy little package to the buyer if problems are to be avoided.  Give it some thought.

If you need a reliable property management company in your area, contact 3 Options now.

Terri Clair
Managing Broker
3 Options Realty, LLC., CRMC®, The Green Broker
678-397-1282
terri@3OptionsRealty.com
http://www.3OptionsRealty.com

The author of this Blog is neither an attorney nor an accountant. Nothing written should be construed as legal advice. Conclusions conveyed are outcomes based upon practical experience and should not be depended upon to be a common outcome of other similar circumstances. Consult with a professional before making tax or legal decisions about real estate in Roswell, Milton, Cumming, Alpharetta, Johns Creek, Woodstock, Marietta or any other municipality in Georgia.