How Hiring An Inexperienced Minneapolis Duplex Realtor Can Keep You From Moving In
As a Realtor who lists quite a few Minneapolis duplexes, triplexes and fourplexes, I get firsthand experience with all kinds of buyer’s agents. I can tell immediately who has experience with multifamily property and who doesn’t.
That inexperience has cost their buyers time, money, and unnecessary stress. This is especially true when the buyer wants to owner-occupy the property.
The number one mistake inexperienced Realtors make on multifamily property is not understanding that when their buyer purchases the property, they are also buying the lease. The lease follows the property, and the tenants’ rights are not diminished simply because it has a new owner.
In other words, you can’t change the rent. You can’t make them move out. You can’t tell them they aren’t allowed to have a dog when it’s in the lease that they can.
And even if the tenant is on a month-to-month lease, you can’t make them move next week. You have to give them proper notice, which is defined through a combination of Minnesota state law as is detailed in the Minnesota Landlord Tenant Handbook, and what’s spelled out in their lease.
Perhaps more importantly, if you want the seller to give the tenants notice before you move in, or to give notice before closing, this request should be in writing, in the purchase agreement.
Sellers may or may not agree to give notice to a tenant on a month-to-month lease, depending on the proximity to the closing date, their perception of risk with the buyer, and whether or not the purchase agreement allows them to retain the buyer’s earnest money if the deal falls apart. After all, if a good tenant moves out and for some reason, the buyer can’t obtain a loan, the seller is stuck with an empty unit in a building they just want to sell.
Sometimes, tenants want to move in to a unit where a tenant has a valid lease that ends months and months from now. Often this is also the unit buyers most want to live in. In that case, the seller may need to offer the resident compensation to agree to break the lease early and incentivize the resident to move. In other words, pay them.
Paying a good tenant with a current lease to move reduces the sellers net proceeds by creating an expense through no fault of the sellers. It also inflicts stress on both the seller and the tenant, who has no obligation to leave.
This all sounds logical enough. However, over the last year several sellers received offers where absolutely nothing about tenant relocation was included in the buyer’s offer. Instead, there was an expectation that either the sellers would give notice simply because they knew the buyer intended to owner occupy, or the buyers asked for the tenants contact information so they could meet.
The latter sounds reasonable. That is, until/unless the sale falls apart. Then the seller is left with an upset tenant as well as an unsold building. Had the buyer’s agent had the experience to put a request for the seller to ask if the tenant would move early into the purchase agreement, however, it may have seemed less adversarial than waiting until the property was already under contract.
That puts the tenant under stress, which of course, gets taken out on the seller.
When I list a property, my fiduciary duties include acting in my sellers best interests at all times. In the case of a sale, that means acting on the tenants behalf as well.