It can be disorienting and alarming to existing tenants when they find out their landlord is selling the property where they reside. Fortunately, you do have tenant rights that must be respected by both the previous owner and the new property owner.
Landlords have legal requirements to respect a lease in most states, including Texas, and new ownership is not a reason to skirt the law. As long as all parties provide reasonable notice and follow the stipulations in a written lease, then the selling process will not be an impediment to following your rental agreement.
Can a House With Tenants Living in It Be Sold?
Yes, you can sell a house with tenants living in it. Tenants can get a new landlord during their lease term, but this does not mean the original lease will suddenly be null and void. The landlord still has property rights, including the right to sell the property at any time.
A landlord has the right to sell the property at any time, and they do not need to inform the tenant until after the sale process is complete. Most of the time, your experience on the property will not change except that you will pay rent to the new landlord.
The Lease Agreement Terms Must Be Respected
Lease agreements usually transfer to the new owner until the lease agreement expires unless you mutually decide that you would like to leave sooner. The new owner often keeps you on because they would rather continue collecting rent than have a vacant property on their hands. Many times, your new landlord will agree to renew your lease because they would prefer to have the rental income, so as long as you are a respectful tenant who pays on time, you rarely have reason to worry.
Can the Original Rental Property Owner Terminate My Lease?
When ownership transfers, the new owner has the same obligation to respect a lease agreement as the original owner. This means they must give you at least 30 days’ notice if they want to end the lease agreement.
However, many leases will have an early termination clause that allows a landlord to evict you should you break certain stipulations, so you will need to understand the terms of your lease and follow the rules provided therein. If you feel you have been unfairly evicted, you have the right to challenge it in court.
Buyers may decide they will no longer rent the property and want the tenant gone before the end of the lease. In this instance, they will pay a termination buyout and, in many cases, a relocation fee to cover your expenses. This is a separate legal contract that you’ll need to negotiate with the new landlord.
What Happens When the Lease Expires After the House is Sold?
Once the lease expires, tenants must make a new lease with the landlord. The owner may end the lease or change the lease term, such as transforming a fixed-term lease to a month-to-month lease. The tenants and the owner must agree on whether to change to a month-to-month lease or keep the old terms, but the landlord is under no obligation to provide you with a new lease.
Tenant’s Rights During House Sale
It’s scary to hear that your landlord is selling the house. However, tenants have rights according to Texas law. A sale does not mean you’ll have to pack up and move at a moment’s notice.
While certain states are rather antagonistic toward tenants, the local laws in Texas ensure that a new landlord needs to show respect to the existing tenants throughout the transition process. Your rights include:
- Receiving the security deposit
- Getting proper notice before you are asked to vacate
- Staying until the lease ends
- Privacy during the sale
- Staying in the home after a foreclosure
Security Deposit
Typically, the deposit is the first and last month’s rent. You have the right to collect this money from the new owner at the end of the lease. Your old landlord will need to provide you with the new landlord’s contact details and explain how to collect the deposit. This is typically provided in a written notice called the “Notice of the Intent to Sell a Rental Property,” which will contain the buyer’s details and inform you of your rights.
Notice to Vacate the Property
The new owner has legal requirements regarding how and when they can ask you to leave. Sometimes, a lease includes a termination clause that says that the tenant must leave if the property is sold, but that does not mean you’ll have to pack up on the day after the sale. The owner must provide you with a 30-day period to arrange your affairs should they decide that they no longer want you as a tenant. Check that your lease does include this clause before you agree to anything.
Right to Occupy the Property After the Sale
When the landlord sells the property, they cannot simply ask you to leave after the sale. Everyone must respect the lease terms, including its end date. However, if the new owner really wants you to leave, they can negotiate with you and pay you a termination buyout.
Right to Privacy
According to state laws, tenants have the right to quiet enjoyment of their homes, including when landlords want to show the property to potential buyers.
Landlords cannot enter your residence without giving proper notice, usually a verbal or written notice issued 24 hours before a buyer will be shown the home. However, there are some circumstances in which landlords can enter without warning, such as if they believe there is an emergency.
The landlord and tenant can also agree ahead of time about when the landlord can enter without warning, such as to perform necessary repairs. In most cases, a showing would not satisfy this requirement. You’re not obligated to tidy up the property, and the landlord must schedule showings at reasonable times. You also don’t need to leave while the property is being shown, even though the seller may strongly encourage you to.
Right to Occupy After Foreclosure
Tenants don’t need to worry if their landlord runs into trouble and the property is foreclosed on. Most of the time, the banks must respect the original terms of the lease and allow tenants to stay on the property, even after they take control.
However, tenants should ask the owner what the foreclosure means for them and their rights on the property. Don’t hesitate to request further information about what happens to your lease upon foreclosure.
Tenants often worry that they’ll be out of a home when they hear their landlord is selling, but they always have at least 30 days to arrange their affairs as soon as buyers sign the sale agreement. In many cases, there is nothing to worry about — they continue to pay rent, just to a new party. You always have rights, regardless of who owns the property, and you will almost never have to pack up on day one of a sale if you have fulfilled your obligations as a tenant.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
