As many of our landlords are not professional investors, when market conditions are more favorable, or when something happens in their life that makes owning a rental property difficult, landlords sometimes ask us if they can terminate the lease in order to sell the property.
The lease is a contract between 2 parties (tenant and landlord). Each party depends on the other to fulfill their end of the contract. There are only 2 provisions in the lease that allow for early termination without penalty:
- A tenant who receives Military Orders has the right to terminate the lease without penalty.
- A landlord who lives outside of the area at the start of the lease may also terminate the lease if he/she is transferred back to the area and intends to move back into the home.
Except for these two reasons, the lease cannot be terminated cleanly. If it is important for a landlord to explore the selling the home, we can offer the tenant the option to move out early, or incentivize them to do so. This year, two of our landlords asked tenants to move out early and tenants took immediate action. Two other landlords asked tenants to move out early and those tenants were not open to moving due to financial or school related constraints.
It is possible to sell a property with a tenant in place if the home is sold subject to the current lease. In this scenario, only an investor would be able to purchase the home. Investors are typically looking to purchase rental property at a below-market price.
So….. it is possible to sell a home before the lease term ends, but there are significant constraints and limitations. We highly suggest that landlords map out their target timeframe for selling the home before they put a lease in place in order to coordinate the lease end date with the target sales date.
Our agents would be happy to answer any specific questions or provide a market analysis at no charge anytime over the course of the lease.