When you purchase a rental property, there’s a chance the property may still be occupied by previous tenants who have signed long-term leases. Before you can finalize everything as the new property owner, you may have questions regarding these existing tenants and whether or not their lease agreements are still legally binding after the sale.
New property owners often have plans to make changes to the building, remodel the units, and eventually increase rental rates based on these improvements, but having tenants already occupying the space can limit these goals or prolong the process. Below are the options covering what you can do when purchasing a rental property occupied by tenants.
Wait Until Lease Terms Expire Before Finalizing the Sale
One thing sellers should consider before rushing to finalize the purchase of the rental property is how the current tenants will be affected by the sale. In addition, sellers should understand they may not get as much interest from prospective buyers if they learn the property will be selling with an active long-term lease attached.
For sellers, one option is to plan for the sale by giving yourself time to allow the lease to expire. Obviously, this is much easier if your tenants are weekly or monthly renters, rather than yearly renters. Once a lease expires, you can make the decision to not renew for another term with the proper notice. If you must sell the property quickly and don’t have the time to allow the existing lease to expire, you can still sell the property. However, it may be more difficult to find a buyer that is comfortable with that arrangement.
60-Day Change of Ownership Notice
If the new property owner inherits existing tenants signed to a long-term lease, changes to the lease agreement cannot be made simply because ownership of the property has changed. The lease agreement is made as a contract with the specific property, not the landlord. That means the new owner cannot force existing tenants to leave until that lease has expired. The new owner takes on the lease as the new landlord and must comply with the terms of the agreement for the duration of the lease. A 60-day change of ownership notice should always be served (by the new owner) to the tenant immediately after the deed is recorded. This should be done in order to give the tenant 60 days to either produce an active lease or to vacate the property.
Additionally, if the new owner does not wish to renew the lease upon expiration, a 30-day termination of tenancy must be served to the tenant at least 30 days prior to the lease expiring. If the tenant is 62 years of age or older, an additional 30 days (for a total of 60 days) notice must be given. This gives the tenants enough time to secure a new residence and make plans for moving. Tenant laws are generally strict regarding this notice, so landlords should avoid trying to rush the process.
Can You Evict Tenants Sooner?
In some cases, there may be a clause included in a lease agreement stating what happens if the property is sold while the tenant is still renting. Some landlords may explicitly state that a new owner can serve a 60-Day Change of Ownership Notice for the tenant to vacate the property without having to wait for the lease to expire. If the tenant signed the lease and has legally agreed to these terms, you are able to have the tenant leave within 60 days of purchasing the property with proper notice.
Additionally, as with any lease, the landlord or a professional Las Vegas eviction services company is able to initiate the eviction process if the tenant has violated the lease agreement in any way. This includes failure to pay rent, extensive property damage, violation of security terms, or conducting illegal activity on the property. Depending on the reason for eviction, there are specific notices that must be served in the correct order for the eviction to proceed. The landlord should never try to force an eviction by locking out the tenant, removing the tenant’s property from the unit, canceling essential utilities, or by committing any other illegal practices/eviction mistakes landlords should avoid.
Another option is paying your tenant to vacate the property. You could try to reach a settlement with your tenant by offering to pay moving costs, refunding the security deposit, or paying the difference between the rent payment amount they were being charged at your property, and the rent amount at the property they choose afterward for a certain amount of time. However, the tenant is under no obligation to agree to these terms and the expense for the landlord is often not worth the trouble. This would be a last resort option if the property absolutely needs to be vacated at any cost.
When Are Professional Eviction Services Needed?
Whether you are selling or buying a rental property, the process can be much more complicated when tenants are involved. In either case, you must allow existing leases to expire and should serve your tenants with a 60 Day Change of Ownership Notice immediately after the deed is recorded to give them a chance to either produce a lease, or vacate the property. If you do not plan on renewing the tenant’s lease, a 30-day termination of tenancy must be served to the tenant at least 30 days (60 days for tenants 62 years or older) prior to their lease expiring. While this may sound simple enough, the truth is that the eviction process can be a very complicated and stressful one on landlords.
In many situations, some tenants may refuse to leave the property even though they have been served a notice, especially when tenants have been occupying the property for a long time. In other cases, you may have problematic tenants with several months left on their lease that may be jeopardizing the sale of the property. Whatever the case, enlisting the help of reputable and knowledgeable Las Vegas eviction services professional is the safest and most sure fire way to ensure the eviction goes as smooth as possible, in the quickest (legal) amount of time.