A number of duplex sellers have recently asked whether or not they should renew their leases with tenants if they are considering selling.
After all, what if a buyer wants to live in one of the units?
Many duplex owners who are on the fence about selling now or at some point in the near future are consulting with an attorney to have move out clauses added to their leases.
In essence, these landlords are asking that tenants agree to move out given proper notice (whatever the state law recommends) in the event they sell the duplex to someone who wants to owner occupy their unit.
This allows the duplex seller to present his or her property as a valid option for a buyer who is not only looking to acquire an investment property, but for a place to live as well. And those kinds of buyers, by the way, make up a big part of the market.
Yes, a few tenants are resistant to the idea, as they fear having to move during the winter, over the holidays, or in the middle of the school year.
Most of my prospective sellers are able to overcome this by explaining IF they decided to sell, it’s likely to be a process that won’t happen overnight.
For example, it might take time to select a Realtor, have a truth-in-housing report done (if required), make repairs to prepare the duplex for sale, have photographs taken and possibly, create a virtual tour.
Once it’s actively for sale, even an immediate offer would result in an additional 30-45 days for the buyer’s mortgage to be funded.
More likely, however, it might take a bit longer to find the right buyer.
And if it’s a short sale, where the property is no longer worth what is owed, negotiations with the lenders involved could take even more time.
Once duplex tenants realize the clause in the lease doesn’t mean they’ll have to move out tomorrow, most, while not necessarily happy with the idea, seem to view the clause as a reasonable request.
Which allows future duplex sellers to keep their options open- which is almost always a good thing.