Ask Lucas

Ask Lucas 006: Is a Lease Terminated when the Property is Sold?

Summary:

Guy from Virginia is wondering what happens to his lease when the landlord sells the property. Does it continue or can it be terminated? The landlord wants to terminate the lease early, but Guy doesn’t necessarily want to leave. Does he have any rights, and how should this situation be handled?

Full Transcript:

Lucas Hall: Hey what’s up everyone? This is Lucas Hall from Landlordology and Cozy. Welcome to the 6th episode of Ask Lucas. It’s a bite sized Q&A show where I answer your questions about landlording and property management. I am a do it yourself landlord, and I’ve figured out how to make landlording fun and profitable, and I do it in my spare time. This show is about promoting quality and ethical property management, and I really just want to teach you how. This next question is from Guy in Virginia who asks one of the most popular questions on Landlordology. Let’s see what he has to say.

Guy: Hi Lucas, this is Guy from Virginia. I’ve got a landlord that has a lease with me and it’s about half over. He wants to sell the property and he’d like me to leave. What options do I have?

Lucas Hall: Hey Guy, thanks for your question. I’m so glad you asked that, because we get that question all the time on Landlordology. Sometimes from tenants, and sometimes from landlords just wanting to handle the sale of a property correctly. The short of the answer is that it doesn’t change your lease at all. If you have a fixed term lease, which it sounds like you do and you’re partially the way through that, what would happen is that your lease just transfers to the new owner. That new owner becomes the new landlord, and you would contact that landlord just like you would contact your old landlord, and you would make payments to that new landlord in the same way that you’ve made payments to your current landlord.

The only thing that would cause that to not work that way is if you have a clause in your lease which says that the lease terminates upon the sale of the property, or even sometimes upon the listing of the property. I would check your lease very carefully, and make sure there’s no clause in there that basically limits your rights. If you have a week to week or a month to month lease, then oftentimes what will happen is the current owner will just give you the appropriate notice to terminate the lease, which is sometimes either 30 days, or 7 days, depending on what type of lease it is.

Then just be done with the situation in that way that he can pass the property onto the new owner without a tenant, which is often desirable for a new owner, because they’re usually buying it to live in unless they have the specific intent of keeping it as an investment property. In that case, oftentimes it’s very appealing to them to have an existing tenant. I would also check with a lawyer, because some jurisdictions allow the tenant to have the first right of refusal, which means that if the property’s going up for sale, the tenant actually has to sign off on a paper saying that he or she is not going to buy it before they can offer it to anyone else.

If you’re interested in buying the place that you live in, that might come into your favor, but I don’t actually know about that for Virginia. I don’t think there’s a state statute for that, but there might be a county or a city statute. If he puts the property up for sale, he’s going to want to show the property prior to that to try to find people to sell it to, and if that’s the case he’s going to need your cooperation. It’s in your best interest to be on the landlord’s good side, because he still has your deposit and he may have waived fees in the past that he might revive if you give him a hard time. Or he might just get angry and not fix stuff that might need to get fixed, whether that’s right or wrong.

I would cooperate with the showings, especially if they give you proper notice. In Virginia it’s 24 hours, so if he gives you 24 hours notice before a showing then you really can’t deny that access. However, if he doesn’t give you 24 hours notice, even if it’s not even him, it’s just a real estate agent bringing someone by, then you can technically deny access, however that will also anger the landlord. If they do find somebody and they do sell it, then they have to disclose the name and the address and the telephone number of the new owner, which is actually Virginia statute number 55-248.12.

If you don’t get that information from the old landlord, then there’s an issue because that’s a statute, and you need to know where to send the new rent, and who the landlord is, and where they live or their mailing address, and how to contact them. The last thing I haven’t addressed is, if your landlord is still playing hard ball and is trying to terminate your lease even though there’s no real just cause for him to do so, other than it’s just not convenient, then you can go back to him and say, “Listen, my lease is supposed to continue. My lease is with the property, not with you, and I’m sorry you don’t like it, but you’re just going to have to market your property as a house with a tenant in it.”

Then his only option is to try to buy you out, which means he can offer you some money in hopes that you’ll leave. If that is appealing to you, then I would even suggest that. Go to him and say, “Hey listen, I know you don’t like it, but I’ll leave if you refund my deposit and you give me 2 months worth of rent.” He may scoff at it, but at the end of the day, if he has a buyer who’s interested in purchasing the property and he’s going to lose that buyer if you’re not gone, then he may just pony up the money and make you a very happy man.

I hope that helps. This is a fairly common issue, and know that you do have some rights, but so does the landlord, and he has the right to sell the property if he wants to, regardless of whether there’s a lease in place or not. It doesn’t terminate your lease, but you also have to be flexible and allow the landlord to show the property with proper notice. I hope that helps. I really appreciate this question. It is a common issue on Landlordology, and I wish you the best!

With that said, keep in mind I’m not an attorney, I’m not a lawyer. I do not claim to be giving legal advice. That’s really what lawyers are for. I’m just an experienced landlord who’s been around the block, and I can answer most of the common questions around rentals and real estate. Definitely check out your state laws, which you can find at landlordology.com/state-laws, and talk to a local attorney who’s licensed in your area. Thanks again.

Ask Lucas is brought to you by Cozy, which provides end to end property management software for landlords. I use Cozy to accept rental applications, screen my tenants, and automatically collect rent online. I automate my rental properties with Cozy, and I love it. Check it out at Cozy.co.

About Lucas Hall

Lucas is the Chief Landlordologist at Cozy. He has been a successful landlord for over 10 years, with dozens of happy tenants and a profitable income property portfolio.
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