Texas SFR Portfolio Sale to Investorw/ Tenants

13 Replies

The market is gangbusters in San Antonio and I am thinking about selling my whole portfolio of turnkey properties (SFH's) with tenants to one investor and sail into the sunset at this point.

However, and I probably need an attorney, but I'm getting mixed signals through my reading on the legal permissibility of selling when tenants are under leases. I'm sure apartment complexes change ownership constantly while occupied so how would this be any different than that I wonder?

Ideally, I'd sell to an investor who wants tenants in place under cash flow positive scenarios which mine are, but I'm just unsure what the consequences of doing so would be from a Texas Tenant-Landlord law standpoint.

There is no legal issue with selling your portfolio with the tenants in place. The buyer purchases subject to the existing leases. This is done all the time. Did you have some specific concern? 

@Travis C.   Not surprised. Let me guess...was it an agent or broker? My philosophy in life and business is...believe none of what you hear and only half of what you see. Confirm everything you're told. You can't imagine the nonsense I've heard from real estate "professionals" over the last 20 years. 

Just read literally hundreds of broker and agents (professionals?) explain that if a buyer and seller meet in person, it's a violation of the fair housing act. I can't even make this stuff up. 

Seller assigns the leases to the buyer.  Seller should also send notice to Tenant that lease has been assigned and should send rent to new place for payment, signed by Seller and Buyer.  Be prepared for T to keep sending 1 - 2 months of rent to old place.  Forward to new.  Deposit is Buyer's responsibility to return under Tex. Prop. Code, but whether it is turned over or credited to Buyer, is up to your negotiations.  Buyer entitled to full files on T's at least by close, but may be negotiated when in the pre-closing process they get the files (copies).  Failure to disclose is Seller's biggest issue.  If you turn over everything you have by/before close on the Tenants, Seller shouldn't have much of a problem.

Originally posted by @Travis C. :

The market is gangbusters in San Antonio and I am thinking about selling my whole portfolio of turnkey properties (SFH's) with tenants to one investor and sail into the sunset at this point.

However, and I probably need an attorney, but I'm getting mixed signals through my reading on the legal permissibility of selling when tenants are under leases. I'm sure apartment complexes change ownership constantly while occupied so how would this be any different than that I wonder?

Ideally, I'd sell to an investor who wants tenants in place under cash flow positive scenarios which mine are, but I'm just unsure what the consequences of doing so would be from a Texas Tenant-Landlord law standpoint.

 Without looking at your written leases, maybe they aren't assignable without Tenant consent? That would be very strange, but thats the only way to be sure you can sell your portfolio and leasehold interest.

How do you have title to the properties?