Kansas City, MO · Member since 2015 · 609 posts · 321 votes
Hello beautiful people of BP,
Title says a lot, but in my specific case, I'm under contract already (selling my 12 units for 1031 exchange). In fact, we're set to close in 2.5 weeks, this all happened very quickly. However, the buyer's appraisal still has not occurred, so potentially the deal could fall through.
I don't want or intend to wait much longer to notify existing tenants that I will no longer be the manager/owner, however I also don't want to alarm them until I feel the deal is as close to being "done" without final execution.
do not alarm them for no need. Did they know you were selling? Any new owner has to honor existing leases as I would think you know cause the buyer has seen them right? Your obligation is such that when transfer happens you don't get anymore money,Notice them then and let them know where to send their future rent/notices.
do not alarm them for no need. Did they know you were selling? Any new owner has to honor existing leases as I would think you know cause the buyer has seen them right? Your obligation is such that when transfer happens you don't get anymore money,Notice them then and let them know where to send their future rent/notices.
Agreed, but they have not been told I'm selling, so this will be "news". And the leases must be honored by the purchaser.
This is simply a courtesy letter, and also to tell them to wait for direction from new owner on where to send payments.
Not sure how long to wait before I let them know, though. I know there isn't one right answer, but I do welcome advice.
Tell them: I sold the property and you will be contacted by the new owner soon. I forwarded your security deposit, lease and contact information to them. Future payments and maintenance requests should all be directed to the new owner. Thank you!
I told my tenants as soon as we started listing (duplex) so that they knew why there were showings of their unit without the owner (me) onsite.
We didn't inform them of the sale until after the appraisal, yet before Closing date. Sure that may be "risky" but tenants want certainty and leaving them in the dark contributes to anxiety. We did inform them we were transferring the Security Deposit to the new owner.
@Nathan Platter I wouldn't conceal the fact that I am trying to sell the property, but I would downplay any impact to the tenant. Let the tenant know if it sells that another investor will buy the property and their lease will transfer. You don't want to notify them of the sale before closing because many deals delay or fall through. There is just no advantage to notifying them ahead of time.
Showings can be a major inconvenience, so I would recommend trying to limit showings or offering a discount on rent to compensate them for their inconvenience. As far as anxiety, they will sense your anxiety more than anything. Tell them everything will be fine and they will just go about their business.
@Dustin Beam I've been on the buying side and (for the most part) the tenants don't know until there's a home inspection. It's pretty easy to come up with a reason for me (a buyer) to get into a few units. And there are usually enough tenants with a good relationship with the PM to make that simple. However, when you have someone out doing a home inspection, appraisal, etc. all of a sudden it's a little less "random" and becomes more consistent. So the jig is usually up for tenants while that is happening. I, as the buyer, have had the current owner tell the tenants that the leases will be honored, etc. at that point. The last thing I want to do is inherit a property where tenants bail because of "rumors" or not understanding that I (as the new owner) can't jump in a raise rents on day one. You'd be surprised (or maybe you wouldn't) about how many tenants think that's the case.
I let my tenants know as soon as I decide to sell. It really does not matter to them when a property sells simply that it is being sold. If they are going to move it will generally be after the new owner takes over if at that time they do not like the way the property is being managed.
They are tenant's, this situation happens regularly and should not impact them directly. They have no control over the sale or change of owner. Since I am selling no reason for me to care what they are thinking.
@Dustin Beam I would notify them after it closes. Will the appraiser need access to all the units for the appraisal? If so, just tell the tenants you are getting the building appraised. You do not need to tell them it is a part of a sale.
In my experience tenants want to know that the new owner isn't going to come in and kick them out and/or manage the property differently than they are used to. Their lease term protects them from being kicked out by a new owner (at least in CT it does not sure about your state) and the latter is just life as a renter. As long as they are clear on where to pay rent and who to call for maintenance issues most tenants don't care who owns or manages a property.
Simple notice when activity is expected at the property so before an inspection. A letter saying inspection related to a potential sale of the property will occur on x date and we will be entering your unit. Please note that should a sale occur per our state law leases must be honored .. ( i would put your state langauge that covers this point here).
@Dustin Beam I would say it depends a lot, but are your 12 units as a multi or SFH? I have gone both ways and in my experience I like to let the tenant know. If it is a multi, I feel tenants are less likely to find out it is listed where as if it is a SFH, tenants seem to always find out before you tell them. If they are on month to month leases versus long term leases that would also influence whether I tell them or not because as the mother of 3 kids I would hate to be told I have 30 days to move my kids out in the middle of winter, but if it was a long term lease I would be less likely to because they would have no immediate impact to their life.