Landlords have the right to sell their rental property to tenants in California. However, the process is not as straightforward as you might imagine.
It’s not uncommon for landlords to rent out their property while waiting to find a buyer. However, it’s vital to understand the basic landlord-tenant right that goes into rental property sales in California.
That’s where this post comes in. In this article, we’ll explore the fundamentals of selling a tenant-occupied property in the state of California.
Let’s jump right in.
4 Tips to Help Sell Rental Property with Tenants in California
Here are some essential steps to take before selling a rental property.
1. Provide Reasonable Notice
As a California landlord, it’s essential to provide tenants with reasonable notice before selling rental property.
Indeed, California’s Right of Possession stipulates that a landlord can’t enter a specific property without the renter’s permission. As such, it’s best to provide at least 24 hours notice before showing the property.
Similarly, the California Civil Code states that landlords must provide at least 120 days’ notice of their intent to sell a rental property. What’s more, the notice should include the date and approximate time of sale.
2. Negotiate Property Showing
There’s no denying that property showing can be inconvenient to tenants. Besides leaving the premises during open houses, tenants also have to worry about thefts during the property showing.
As such, it’s essential for landlords considering an open house to show respect for their tenants’ space.
While you can ask your tenants to clean the home or provide a lockbox, they should get something in return. For example, consider compensating your tenants with reduced rent during the selling period.
Note: Although landlords may ask a tenant to vacate the house during property showing, tenants have the right to refuse the request.
3. You Can’t Break a Lease
Again, tenants have the right to remain on your rental property until their lease ends. That means landlords can’t break the lease while trying to sell a rental property in California.
Instead, the state of California expects landlords to provide at least thirty days’ notice before requiring a tenant to move out. Note that the process is complex and more restrictive in cities such as San Francisco and Oakland.
If a specific rental property sells during the lease, the tenants are expected to continue paying rent to the new owner. However, both parties can renegotiate a new term when the lease expires — or the tenant can move out.
4. Know Your Rights
As said earlier, landlords have a right to sell their rental property under California law. But to what extent?
For one, the law prevents tenants from impeding the property sale or intentionally making it difficult to market the house. Also, tenants have to continue paying their rent and following eh terms of their lease.
According to the Ellis Act, a California landlord can evict renters to covert the properties into tenancies-in-common (TICs). Since the Ellis act takes time, property owners have to pay relocation fees to tenants.