Tenant’s Rights – What to Do When you Want to Sell

You want to sell up. You own the place, so there should be no problems, right? Wrong. Most contracts will mean that there are a number of hoops you have to jump through to sell a property that is tenanted. As such you need to think carefully about whether or not you should sell with tenants in situ.

It is of course you right to sell the property at any time and in this article we will discuss why you might choose to sell and what you can do to ensure a smooth sales process even when there is a tenancy running at your property.

Why Might you Sell?

There are of course multiple reasons why you might decide to sell your rental investment and I think at this stage it is important to understand why you intend to sell. Understanding your reasoning may help you be more rational about the sale and may make you reconsider this as you may be able to hold off and find a better time to market the property.


You may find yourself in a situation where you need to get your hands on some cash. This may be a family issue, such as a divorce or death, sending a child to college or simply you may want to invest the money tied up in the property elsewhere.

This is a perfectly valid reason for selling, but do a little research first and try to find out if this is the optimum time for you to sell. If the market is a little depressed and you have the option to wait this may be something you should look at.

Strong Property Market

The property market in your area may be booming and you don’t want to miss out. This is again another very common reason for landlords to sell up and taking a keen interest in your area’s property market will help you decide whether now is the time to sell or not.

Speak with some brokers and have them give you a valuation of the property so that you can understand how much the value of your property has grown. If you had an investment strategy when you purchased the property and the value has now hit your “cash out” level then looking to sell may be a great idea.

Accidental Landlord

Many people became landlords due to inheriting the property and as such you may find that you have no desire to continue running a rental property. If you have recently inherited a rental property and are unsure of what to do, speak with some brokers and try to get an idea of the current market conditions.

You may find through your research that now is not the right time to sell and as such you should hold the property, but if the market is currently in a good state selling may be a wise move.


You may have owned the property for a number of years and now are planning to retire. As such, holding the property and running a rental business may not be something you wish to do.

If you are looking to settle down and release some cash from the investment, have the place valued and be smart about selling at the right time. Owning a property for a number of years often results in very positive growth so it may be that regardless of how the market is performing you have experienced substantial growth and as such will look to sell.

Dealing with Tenants

So, you have decided to sell and are confident that now is the best time to do so. However you are still in the middle of an ongoing tenancy. What can you do to get vacant possession and are you aware of the tenant’s rights in relation to your plans to sell?

Remember, it pays to understand that the tenants do have rights, but below we will look at how you can make this process easier for all parties. If you are unsure of what to do, always speak with your broker before discussing any potential sale with your tenants.


If you are toying with the idea of selling prior to renting the property it pays to have clauses added into the contract to make the sales process easier for you. You can look at having clauses added in relation to viewings, to keeping the property clean and tidy for potential buyers and even pre-agree a price with your tenants should they be interested in purchasing the property.

If you know beforehand that selling is something you are considering discuss your options with your broker and have them amend the contract accordingly. It pays to have in place a plan should you be considering selling. Even if you are not having the added flexibility that these clauses offers you can only be viewed as a positive.

Break Clause

Further to the above having a break clause added to the agreement that gives you the flexibility to serve notice on your tenants after a certain date can make this process a lot easier.

Most landlords will aim to sell with vacant possession in place making viewings, etc. much easier. As such having a point in the contract after which you can break the lease makes a lot of sense.

However it pays to be mindful that in most instances the break clause will be two-way and if you are not aiming to sell currently your tenants may break the lease leaving you without tenants.

Selling an Active Lease

Selling a tenanted property may not be ideal, but it is also not as hard as you may think. Whilst selling an active lease does narrow down your options it can also be deemed a huge benefit by investor buyers who will often view having a running tenancy as saving them the hassle of having to source a tenant.

Before choosing this option speak with a few brokers to see if they are aware of any investors that are active in the market at the moment and maybe have your broker discuss your property with them before committing to marketing the property.

This option presents little hassle to the tenants and should be considered if you are not desperate to sell. It is worth mentioning that should you narrow down your list of buyers by selling this way the property may take longer than usual to sell.

Agree to Allow the Tenants to Leave

You may not have a break clause in your lease and the sale may be out of your control. As such discussing the issue with your tenants is smart and you may be able to come to some form of arrangement with them.

Perhaps you could offer to guarantee the return of their deposit or offer them glowing references in future in return for their cooperation in vacating early. Broaching the subject and being honest in your dialogue with the tenants should help you reach an understanding with them that allows for the end of the contract.

Remember tenants may not be happy to leave, so if you can compensate them in any way that may help.

Paying Tenants to Vacate

Beyond the above, you may be keen to offer your tenants a reward to leave. This transaction should be confirmed after you have sold the property and any outstanding compensation you offer the tenants should be settled by you once the sale has gone through.

A lot of tenants will agree to vacate if you are prepared to pay them to leave. This would go beyond returning the deposit and may not be something that everyone is comfortable with but it may be an option for you if the tenants are dragging their heels and you really need them out.

Have your attorney draw up an agreement for the amount offered, plus the terms of the compensation such as timeframe of payment, etc. and have it signed by all parties to ensure there is no confusion post tenancy.

Sell to the Tenants

Your tenants clearly like the place, that’s why they chose to live there, perhaps you have the option to sell it to them. This option is commonly used and can make the process very smooth for you as you wouldn’t even have to actively market the property.

The first thing you should do when you decide to sell your property is to discuss selling the property to your tenants with them. This way the tenants get a property they know, you save on agency fees (you may be prepared to give the tenants a little off the asking price to do this) and the tenants are not disrupted by having to vacate the property.

Wait Until the Lease Ends

If none of the above are working for you then you do of course have the option of allowing the lease to end. Speak with your broker to ensure that you know when the lease ends and that the tenants do not have the right to extend the agreement without you being able to refuse.

If this is the case and you are unable to come to any agreement with your tenants simply allow the lease to expire, wait for the tenants to vacate and then market the property from there. This may not be the most desirable option due to the time wasted in waiting for the tenants to vacate, but it may be your only option and one that every landlord has the right to use.


Selling your property when it is tenanted can be a headache. You are relying on the tenants to be helpful and assist you with viewings, etc. As such it pays for you to keep the process amicable.

Use your broker to mediate any issues you may have and give the tenants as much notice as possible once you have decided to sell. Giving them as much time as possible to find a new home will be important when trying to keep the relationship amicable .

Check your contract and understand exactly how much notice is required by law. If you have clauses in the agreement that relate to selling ensure they are enforced and always offer the tenants the first option to purchase the property.

If all else fails you always have the option of allowing the lease to expire and hoping that any positive market conditions do not change. Over the years I have dealt with numerous mid-tenancy property sales and if handled correctly you will rarely experience any issues.

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