Selling properties with tenants presents unique challenges that can affect the sales process, the property’s marketability, and ultimately the outcome for your clients. Here are some challenges and potential solutions:

Lease Agreements that Survive the Sale

Many leases include provisions that protect a tenant’s right to stay in the home for the duration of the lease, even after ownership changes. For buyers looking for a primary residence (approximately 83%, according to NAR), this can be a significant deterrent, as they may be reluctant to inherit tenants.

All parties must understand the lease terms clearly and explore whether early termination or renegotiation with tenants is an option.

Property Condition and Tenant Cooperation

Tenants living in a property listed for sale can significantly affect its presentation. Unlike homeowners motivated to stage their property for Buyers, tenants often lack the incentive to keep the home clean, tidy, and presentable. Unkempt or cluttered spaces can leave a poor first impression, reducing Buyer interest and potentially lowering the property’s value.

Availability and Access Issues

Most lease agreements require landlords to notify tenants before entering the property for showings, usually with 24 to 48 hours' notice or more. While this notice is essential for protecting tenant rights, it can create obstacles in today’s fast-paced real estate market. Buyers often expect same-day access, particularly in competitive markets where timing is critical. Delayed access can result in missed opportunities and longer listings on the market.

Balancing Act: Landlord Income vs. Sales Process

Divorcing parties are often hesitant to remove tenants before listing their property because the rental income offsets mortgage obligations and other expenses. While this is a valid concern, balancing the short-term benefit of rental income with the long-term goal of achieving a smooth and profitable sale is essential.

Potential Solution: “Cash for Keys”

One effective solution is offering tenants a “cash for keys” agreement. This approach provides financial incentives for tenants to cooperate during the sales process. Incentives may include:

• A cash payment for keeping the property in a presentable condition

• Additional compensation for granting flexible access for showings

• A negotiated sum for voluntarily terminating the lease early, enabling the property to be sold vacant or staged

The “cash for keys” strategy not only improves marketability but also fosters goodwill between landlords and tenants, reducing potential conflicts during the process.

Who Pays When the Tenant Vacates?

It’s crucial for the parties to establish an agreement regarding financial responsibilities once the tenants vacate — including who will provide access to the property, cover the mortgage payments, maintain property upkeep, and pay utilities until the house sells. 

In a perfect world, the property would be sold vacant, cosmetic repairs would be made, the house would be staged, and access would be unrestricted. When you don’t live in a perfect world, these strategies will help save you time and money. 

A knowledgeable attorney and credentialed listing agent with knowledge of family law reduces litigation and costs.  Livingstone Law, APC is here to help you.  Contact us

This Blog is posted with the permission of its author, as noted below

Bridget Potterton
Keller Williams San Diego Metro
858-257-1555
DRE# #01483417
www.ComeHomeToSanDiego.com