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When renters are living in a property you are interested in buying or selling, there are additional considerations you’ll need to keep in mind as the transaction progresses. Tenants have rights under the terms of their lease as well as under various local and state laws, so it’s important to enter negotiations with your eyes wide open to how the presence of tenants will affect the transaction.
An owner does have the right to sell a property with a tenant living in it. The question is what happens with the tenant when the owner wants to sell. In Connecticut, tenants have the right to remain in the rental property even after the property is sold. The tenants can stay until their lease is over. If the rental is month-to-month, then the buyer or seller can end the tenancy by giving the tenant three days’ written notice. Any contract of sale should include provisions describing the tenant’s occupancy and how it may factor into the deal.
The presence of tenants can make a property attractive to some buyers, particularly investors who like the idea of having occupants there to provide continual rental income. But if the property is a single-family home, and the primary buyers’ market is comprised of people who would like to move in and live there, it could be wiser for the seller to wait and put the property on the market near the end of the tenant’s lease. This helps minimize problems that arise when a buyer wants to move in but a tenant is still there.
Sellers sometimes can’t control the timing of when they need to sell, so a sale may need to take place while a tenant has several months left on their lease. In those cases, the seller could attempt to negotiate with the tenant, perhaps by offering money to the tenant and an incentive to modify the lease and move out early. Buyers should be made aware of the early termination agreement, though, because if the tenant suddenly decides not to leave, the new owner could be the one who has to start an eviction proceeding, which can be contentious and expensive.
No matter what, sellers must remember to give the tenant proper notice that the lease won’t be renewed. The amount of notice should be specified in the lease agreement.
The real estate lawyers of Gesmonde, Pietrosimone & Sgrignari, L.L.C. have significant experience helping clients navigate purchases and sales of residential and commercial properties with tenants. To discuss your situation with one of our attorneys, please call 203-745-0942 or contact us online. We have offices in Hamden and East Haven for your convenience.
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Gesmonde, Pietrosimone & Sgrignari, L.L.C. is located in Hamden, CT and serves clients in and around North Haven, Hamden, Waterbury, Bethany, Milford, Wallingford, Prospect, Woodbridge, Northford, Madison, Beacon Falls, Branford, Cheshire, North Branford, East Haven, Naugatuck, Meriden, Ansonia and New Haven County.
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