What Happens To Tenants When You Sell?
One of the most common questions I’m asked by Minneapolis and St Paul small multifamily property sellers, buyers, and tenants is what happens when the building is sold with current tenants. Are they forced to:
- Move out
- Be evicted
- Have their rent increased immediately.
The short answer is, none of the above.
Prospective duplex sellers often are wary of telling their residents they’re considering selling for fear of them moving out in droves and leaving the owner without income.
The fact is if the tenant has a current lease he or she can’t leave until that lease has ended. Even then, in the state of Minnesota, tenants must give housing providers proper notice in accordance with the terms set forth in that lease.
In real estate, any current, valid lease follows the sale of the property, not the owner or seller of a property.
That means that buyers who are purchasing a duplex, triplex or fourplex with the intention of moving into one of the units must choose either a vacant unit or one with a month-to-month lease. Proper notice must be given in the event there is a tenant in place with an expired lease.
Because a lease is a document that for all intents and purposes is bound to the rental property, buyers must adhere to the terms set forth in it. That means if the resident has a current lease that is not month-to-month, the buyer is bound by the terms of that agreement until such time as it expires. That means the current amount of rent being charged may not be changed until such time as that contract has expired.
It’s important to note that eviction and a notice to vacate are different matters entirely. An eviction is a legal action that requires the housing provider to follow a specific course of action through the legal system. If the housing provider is successful, the tenant receives an unlawful detainer or UD on their credit report, making it difficult for them to secure living arrangements from other housing providers.
Giving a resident who is current on their rent but who is occupying a unit for which the lease is no longer current is simply a matter of giving notice, in writing, within the timeframe set forth in the lease.
Regardless of whether you’re thinking of selling your duplex, buying one to live in, or a tenant who’s concerned about having to scramble to find a place to live, remember that a lease is a binding legal document to the property and is meant to protect all parties involved.