PROPERTIES OCCUPIED BY TENANTS
Properties Occupied by Tenants: Be cautious when writing a purchase agreement on a property that has a tenant occupying the home. Mistakes are often made on the PA with these types of deals. The contract might read that possession shall be delivered at the close or ‘X’ days after close. If a seller has a tenant in the home, those tenants have rights and the seller may not be able to deliver possession of the property according the contract. If you’re representing the seller, advise them of the risks, and make sure the PA terms are possible. If you’re representing the buyer, make sure they contact their attorney to understand tenant rights. Determine what the seller is able to do, and what the buyer wants to do. If the buyer wants the property delivered with no tenant rights, make sure to specify that on the purchase agreement. See this purchase agreement section that has “Tenant Rights” selected in the Possession section of the purchase agreement. These tenant rights clauses may show up on other segments of a purchase agreement but most often in the possession paragraph section. If youre listing a tenant occupied property make sure tenant rights are included on a purchase agreement accepted. If youre the selling agent make sure you specify if a property will or will not have tenant rights if a tenant is located in the home your buyer is offering on. It’s risky for a owner occupant buyer if they are buying a tenant occupied home with possession to the tenant after the closing. The tenant may not leave after the stipulated possession period which could cause your buyer many legal and occupancy issues. I encourage sellers of single family homes to remove tenants before listing to eliminate many buyer concerns which will cause many potential buyers to walk away, not to mention many tenants make it hard to show a home by declining showings and not keeping the home is ‘show’ ready condition.
