Selling a Rental Property: Laws and Liabilities for Landlords

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Closeup of a rental property for sale in a beautiful neighborhood

You’ve decided it’s time to sell your rental property. Maybe you want to be done with condos, or you’re ready to cash in on the appreciation of a couple of single-family homes, or property taxes are becoming too expensive.

No matter the property type, if a tenant occupies your property, there are laws and liabilities for landlords when selling a rental property. You need to navigate the laws to avoid legal snafus.

You have to make sure that you follow the local laws that govern the tenant’s rights, and you need to follow the terms of your lease agreement. The laws and lease will affect your ability to sell the home. For instance, you will need to work out times with the tenant to show the house and keep the home show-ready. 

Selling your rental with a tenant can be daunting, but with the correct information, it can be easier. 

This article explains how to sell a rental property, landlord rights, renters rights, and landlord liabilities. This information provides necessary context about the laws and liabilities for landlords when selling a rental property. It makes you better prepared to make a sale. 

How to Sell a Rental Property

As you research tenants’ rights for fair housing, you may wonder how to sell rental homes. The good news is that you have options available to you. These options depend on your motivation to sell, the willingness of a tenant to cooperate with you, and any agreements you have with a property management company.

The three options are: 

  1. Wait until the lease expires
  2. Sell your house with a tenant
  3. Sell to the tenant

Option #1: Wait until the lease expires

Waiting might be the easiest option to sell the rental property. You’ll lose money from not collecting rent, but it gives you a better chance to sell your house faster and for more money. 

Selling your home after the lease expires is probably your best bet because:

  • You increase the pool of buyers to include investors and people who want to be homeowners.
  • You can make repairs or renovations. 
  • You can keep the house show ready and avoid scheduling conflicts.

Another thing to consider is that your tenant won’t have the chance to make any disclosures about the property to a potential buyer. Instead, you have a clean, restored, and show-ready house to entice potential buyers. It’ll be easier for the buyers to imagine themselves in a home that is a blank slate.

Option #2: Sell your house with a tenant

Selling an occupied house might not be possible, but it’s cost-effective if you pull it off. You must chat with the tenant and secure their cooperation. They’ll have to work with you to schedule showings and keep the house show-ready. 

Selling a house with a tenant also affects your buyer pool. You’re left with selling to real estate investors gauging the rental market or buyers who are okay with waiting for the tenant’s lease to expire. 

For buyers interested in real estate investing, a good tenant may be a selling point as it is guaranteed, reliable rental income. If your tenant has been solid and you’re selling to a real estate investor, you may want to help them with screening tenants by talking about your current renter.

The information you provide may help them reduce the cost of marketing a new rental. Pertinent information includes:

  • Length of stay
  • Monthly rent
  • Rent payment consistency
  • Utility payment
  • Security deposit
  • Square feet of property to determine rent per sq. ft.
  • Upkeep of property
A young landlord shakes hands with her renters after selling a rental property to them.

Option #3: Sell to the tenant

Selling to a tenant is probably the least likely situation. Renters rent for a reason; it might be that they don’t want a house. They could also be unable to afford a home or secure a mortgage. 

It will be difficult for you to sell the home to the tenant using a traditional route, but you may decide to finance the home and skip the hassle of dealing with a realty brokerage firms or real estate agents. You could do that, but it comes with risks and responsibilities. One possibility is that they stop making mortgage payments. As a result, you’ll have to resort to court to get the tenant out of the home, which can be costly and time-consuming. 

Landlord Rights When Selling a Rental

Your first question was, can I sell my property with a tenant? The short answer is yes; you can sell your home. But, there are laws and liabilities for landlords when selling a rental property. 

The type of tenant you have determines what landlord rights are at your disposal. 

If your renter is month-to-month, you can end the lease, provide the legally required notice, and the tenant will legally be bound to leave the property. The rules for giving notice vary from state to state, but usually, the time frame is 30 days.

If your tenant is on a fixed lease, you will probably have to comply with the lease terms. A tenant can usually stay in the home for the entirety of the lease whether you sell the house or not.

One exception is a lease termination upon sale clause. If you have this clause in your lease agreement, then you can end the lease early due to the sale. You may have a tenant with a one-year lease, and this clause. The clause may provide a 30-day notice for lease termination due to a sale. If you sell the house, the clause triggers, and the lease ends in thirty days, no matter how much time remains on the lease. 

Two young homeowners confront a property administrator about their renters' rights when selling a rental property

Renters’ Rights When Selling a Rental

Before selling any property, you should know the tenant’s rights. If you know the tenant’s rights, you can avoid grievous legal issues. 

For most states, you’ll need to be aware of the laws concerning: 

  • Lease agreement 
  • Property condition
  • Security deposit
  • Showings 

Lease agreement: The tenant has the legal right to the term of the original lease agreement. They can stay until the end of the lease. Also, a lease goes with a property, not an owner. They signed the lease, so the new owner must follow it.

One thing you might consider is a cash-for-keys scenario where you offer the tenant money to vacate the property voluntarily. An empty home may help increase the sales price, and the cash-for-keys payment would be a nice return on investment.

Property condition: The tenant has to vacate the property for a new owner. That means they have little motivation to clean it like they usually would. To persuade a tenant to clean, you might consider paying them money. 

Security deposit: Tenants have the right to receive their security deposit. You must tell the tenant how they will receive the security deposit. In general, you will give back the security deposit minus the cost of repairs and cleaning, but not depreciation. You’ll need to provide receipts and proof that you spent money on cleaning and repairs. Otherwise, you may get sued. 

Showings: Tenants reserve the right to get proper notice before you show the home. You’ll have to coordinate and schedule a time with the tenant. In most cases, you’ll need to provide a one or two-day notice to show the property. Tenants still have the right to privacy, and showing at odd night hours or frequently scheduling showings may violate their rights.  

A young homeowner argues with her renters about selling a rental property

What is the Landlord Liable for When Selling a Rental 

Selling a home is challenging; the difficulty factor increases when selling an occupied rental property. Let’s examine what a landlord is liable for when selling a rental. It’ll help you avoid potential legal pitfalls. 

You’ll have to honor the terms of the lease agreement. If you have a month-to-month renter, all you’ll need to do is give notice that the lease is ending. You’ll have to abide by the lease terms if you have a fixed-term lease with a tenant. Also, the tenant has the right to know the date they must entirely vacate your property.  

Also, depending on your state’s laws for entry by a landlord, you’ll have to provide a 24-48 hour notice to your tenant before showings. This notice requirement also applies to the following: 

  • Appraisals
  • Inspections
  • Repairs

You’re liable for scheduling visits to the home. Typically, you’ll want to schedule showings during reasonable hours. It’s a good idea to speak to the tenant and agree on the best times to show the home.

When you sell the property, the tenant may have to relocate. In some cases, the tenant qualifies for relocation assistance, a program in certain states meant to help low-income renters. You may have to pay a portion as a relocation fee. 

The landlord must only pay a relocation fee if it’s codified into law. Even if it’s not legally required, negotiating a relocation assistance fee with your tenant might help give you a vacant property to show potential buyers. 


Selling a house is difficult. The laws and liabilities for landlords when selling a rental property make a sale even more difficult and time-consuming. But the following information should help smooth the process. 

You can sell a property by waiting until the lease expires, selling your house with a tenant, sell directly to the tenant. 

Renters have rights when you sell a rental property. These rights include the right to: 

  • Continue their lease agreement
  • Leave the property as-is when they vacate
  • Receive the security deposit
  • Proper Notice for showings

You have other considerations you may be liable for when selling a rental, including: 

  • Honoring the lease
  • Scheduling with notice and during reasonable hours
  • Relocation fees

If you have a rental property that’s causing you problems, and you’re ready to sell for a fair price, we can help. We buy homes in Tennessee, especially in Knoxville! We’ll buy your home as-is, and you can be rid of the vexatious house. 

We have the cash to buy your home when you work with us. That means we don’t have to wait for a bank to finance us so that we can close on your terms and timeline. You don’t need a realtor when you work with us. That makes the process quick and straightforward and allows you to avoid high closing costs.

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