Can a landlord break a lease if they need to sell

Question

Hi all, looking at signing a 2 year lease with a tenant. My question is, if we later decided we must sell and do something different with the equity, can a landlord break a lease in order to sell the property? I'm in South Carolina TIA

Bill B. · Answer

I charge the same for MTM as a 2 year lease. About $100-$200 more than a 1 year lease. (5-10%). The tenant is paying more for locked in housing expenses or the option to move at any time with a 30 day notice. I’m being compensated for being locked in to a deal for 2 years or not having any idea of when the property might go vacant.

I truly used to be so naive as to offer discounts for 2 year leases because I wanted the reliability. Not figuring out that not only was I losing money the first year. I was losing even more money the second year when I could increase rents. So now I add 50-75% of my year 2 rent increase to 2 year leases. This locks in the 2nd year rent increase and actually pays off if they move early or quit paying rent.

Mohammed Rahman · Answer

Hey! So, in South Carolina (and really most states), a landlord can’t just break a lease because they want to sell the property.

The lease is a binding contract—if the tenant has a signed lease, they have the right to stay until the end of that lease term, even if ownership changes.

What you can do is sell the property with the tenant in place and the lease would transfer to the new owner. The new buyer would need to honor the lease until it expires.

If you want the flexibility to sell sooner, you could try adding an early termination clause in the lease agreement.

But tenants usually want some kind of compensation if you go that route, like a few months’ notice or financial relocation help.

once you sign that lease, you’re locked in unless you negotiate an exit with the tenant.

Caleb Brown · Answer

No. The lease has to be honored unless you added special verbiage or tried doing cash for keys.

David Peschio · Answer

A lease agreement typically survives the sale of a property, meaning it continues in effect even after ownership changes hands. The new owner steps into the shoes of the prior landlord and is bound by the existing lease terms. They generally cannot terminate or alter the lease simply because they purchased the property, unless the lease itself includes a specific clause allowing termination upon sale.

Joe S. · Answer

I have two properties when the lease runs out I’ll probably just let them go to months to month…

Joe S. · Answer

unless you added special verbiage Caleb, I’ve never considered adding special verbiage to a lease like that. 🧐✅

Jared Wooten · Answer

Great perspective on doing 2 year leases! Something we will definitely keep in mind moving forward. It almost seems intuitive to provide a discount for the security of having a renter that long, but your explanation of why it may not be is spot on.

Jeremy Horton · Answer

I switched property managers a couple years ago - he made this suggestion as well. There is a 30 day notice the tenant is supposed to give if they move out anyways.

It's almost like when it goes MTM the tenants don't even think about it and pay month to month. I didn't increase the rate either. I don't think the potential $25/50 a month is worth risking vacancy. Basically just tried to minimize anything around when the lease ended. And you're not locked into that tenant either - anytime you want to increase, sell, renovate etc you're able to

Tenants will leave whenever they want to anyway, regardless of what the lease says. And it's probably likely not worth it to try and take them to court - even if you win, now you have to actually collect. Getting the judgment against them and actually collecting are two different things. If this did happen, you can probably find a way to justify keeping most of the deposit.

Long story short - not many downsides going MTM and more potential upsides.

Caleb Brown · Answer

Makes sense. I see some PMs charge tenants a $25-$50 upcharge for MTM leases compared to a 12 month one

Peter Mckernan · Answer

Depending on the state and area you are in, the owner can ask the tenant to leave early, but they may say no. I would see what your state and local laws say about this and also see what the lease has in it. Then that will give you baseline if you can sell and bump the tenant out of see if you need to wait till the lease is over.

Can a landlord break a lease if they need to sell

Can a landlord break a lease if they need to sell

Most Popular Reply

13 Replies