The term real estate is not just about buying and selling but it’s about enhancing neighborhoods, creating comfortable living spaces, and providing secure shelter for those who are known as “tenants.” When you rent out your house it means you have dual responsibility –looking for your property and taking care of tenants’ rights. And remember when you are selling a house with tenants residing in it, the process could become complicated if you are unaware of tenant-related legislation and rules. There arises the question, “What do we know about the tenants rights when landlord sells property?”
“It’s not always about ROI when you own real estate. In fact, it is about creating a positive living experience for those who call it home, especially when ownership changes. Honoring tenant rights is not a good practice but it’s the right thing.” said Dave Ramsey
In this blog you will learn about these rights in detail but before we move forward, it’s important to know what the law says about this.
Tenant protection laws may vary depending on the state-specific regulations and legislation. Below is the table that tells you about the tenant protection laws of five different states in case when landlord plans to sell the house:
Table 1: Tenant Protection Laws by U.S. States
| State | Tenant Protection Law | Impact on Tenants During Sale |
| South Carolina | South Carolina Code of Laws Title 27, Chapter 40 | Tenants must be provided with 30-day notice if the property is sold. New owners are required to honor existing lease agreements. |
| California | California Civil Code, Section 1946.1 (30-day notice) | Tenants have the right to stay in the property if the lease is active, even after a sale. The new owner must respect the lease agreement. |
| New York | New York Rent Stabilization Law (RSL) | Tenants can’t be evicted without a cause in rent-stabilized units, and the lease agreement must be respected by the new owner. |
| Texas | Texas Property Code, Section 24.005 | Requires 30 days before Eviction Notice from Landlord, but tenants cannot be evicted solely because the property is sold if they are on a valid lease. |
| Florida | Florida Statutes, Chapter 83 | A tenant must be given at least 30 days’ notice before eviction if property is sold; the new owner must honor existing leases. |
Tenants deserve fair treatment and transparency, especially during a sale. Remember, your fame as a seller is more important than any deal.” Gary Keller
If you are a landlord or real estate investor selling a house, then no doubt your recognition as a seller is much important than a deal. To avoid reputational risk or any other issues you need to observe the tenants’ rights while selling your property. For example, if you don’t follow the lease agreement, then your sale will be affected and on the other hand it will leave a negative impact on the tenants’ lives because relocating the house suddenly is not a pleasant experience. Check out the table below to see how the house sale effects the tenants:
Table 2: Effect of Property Sale on Tenants
| Region | Percentage |
| United States Nationwide | 19% of renters have experienced a change in ownership in the past 5 years |
| California | 22% of tenants affected by sale or change of ownership in the last 3 years |
| South Carolina | 12% of tenants faced a sale-related impact |
| New York | 18% of tenants faced a sale-related impact |
| Florida | 15% of renters impacted by property sale over the last year |
| Texas | 13% of renters experienced ownership changes |
“If you’re buying or selling property, remember that your tenants are your responsibility. The rights of tenants matter just as much as your investment.” said Robert Kiyosaki
As a landlord, if you want to ensure a smooth property selling experience then you must observe these tenant rights to avoid misunderstanding and confrontation:
When you wish to sell then check the termination date of your lease term to see whether it is completed, then give a notice to the tenant that they may leave the house or building before it ends. A tenant must be given 30-60 days to plan and leave the property. The time varies across the U.S. states, refer to Table 1 if you are living in South Carolina, California, New York, Texas, or Florida.
It’s not simple that one day you plan to sell your house and the next day you bring the new homeowner for viewing. The law dictates that you must inform your tenants about 24-48 hours in advance before property showing. This is just to avoid inconvenience or violation of tenants’ privacy. If you are on good terms with your tenants, then give them a call and let them know about this visit 1-2 days before.
In case you want to sell your house fast and need to terminate the lease agreement. For this you need to know that your tenants have a right to receive a lease termination payout “cash for keys”. Offer the tenant the payout if they agree to vacate your property before the end of the lease.
Give them enough money to cover the remaining time on the lease to facilitate their movement from your property. This is effective only if the lease doesn’t have an early termination clause.
Tenants also have a right to receive a relocation fee when landlord is selling the property. These rights are applicable in certain situations, such as rent control ordinances or when evicting tenants without any reason. A landlord must pay all the relocation fees in some states, but it doesn’t apply to all areas. Here the table shows the details for California and South Carolina states.
Table 3: Relocation Fees for Tenants in California and South Carolina
| State | Relocation Fee Requirement | Amount | When It Applies |
| California | Landlords may be required to pay relocation fees under certain conditions, such as rent control ordinances or when evicting tenants without cause. | $5,000 for tenants in a rent-controlled unit in major cities like Los Angeles. For other areas, fees may vary based on local ordinances. | Applies when tenants are evicted without cause, especially in cities with rent control laws like Los Angeles, San Francisco, and Oakland. |
| South Carolina | South Carolina does not have a statewide law requiring landlords to pay relocation fees. | No statewide relocation fee requirement. | Relocation fees are not required by law in South Carolina, except in specific cases related to redevelopment or other contractual agreements. |
A good landlord should pay attention to matters affecting a tenant or their duties. This is because a tenant can break the lease agreement if they feel their rights have been neglected when you are selling the property.
If you disregard the lease, your tenant is free to walk out of the agreement and then remain on your property as long as they wish. This means that such a tenant can break a lease without facing any consequences.
If lease agreement is active or the landlord doesn’t agree on “cash for keys”, then tenant has the right to stay in the property if it is sold to a new owner. Even the new homeowner has no right to vacate the property until the lease agreement expires.
Table 4: Tenants’ Right to Stay During Property Sale in 5 U.S. States
| State | Legal Protections for Tenants | Right to Stay in Property After Sale |
| California | Tenants are entitled to the full term of the lease, even after a sale. The new owner must honor lease agreements. | Yes, as long as the lease is valid. |
| New York | Tenants in rent-stabilized units have heightened protections; new owners must honor leases. | Yes, especially for rent-stabilized units. |
| Texas | Tenants’ rights are protected until the lease expires but must receive proper notice before eviction. | Yes, if the tenant’s lease is still in effect. |
| Florida | Tenants are protected under lease agreements; sale doesn’t terminate lease unless lease is up. | Yes, until the lease expires, or a new agreement is made with the new owner. |
| South Carolina | Tenants must be provided with 30 days’ notice of sale or eviction; the new owner must honor the lease. | Yes, if the lease is still active. |
At the time of lease signing, a tenant deposits some amount for the security of the property to landlords. It’s obligatory for the owner to pay back that amount to the tenant when they are vacating during property sale.
When you tell your tenant to quit, it frustrates them, and they have the right to sue you for not giving them proper time to vacate the property or for ending the lease prematurely.
Also, the tenant may sue you upon withdrawal of basic services like security. You can be dragged into small claims court to pay back the security deposit. Remember such an action of a tenant is one that makes other buyers wary of transacting with you.
When you are selling your property, the tenants still have the right to stay in a clean environment. You need to make sure the utilities are in perfect shape and the overall property is clean. Moreover, you require regular repairs since you are going to change ownership of the property.
If the property is not in excellent condition, the tenant may void the contract or deduct some amount from the rental money. He could also seek litigation in court for housing cases.
The tenant also has a right to stay within his house whenever the buyer’s viewing is made, and they have a rental contract in hand. They should not clean it to attract their potential buyer instead. To avoid such situation, landlord can pay for cleaning services to enhance the house condition.
It is important to gain a comprehensive understanding of key tenants’ rights when landlords sell property. If you neglect these rights, then your property selling experience may become complicated. As a seller you should maintain your reputation in the market and as a human you should worry about the emotions of the tenants. By properly notifying them about property showings, following the terms of the lease agreement, and paying their security deposits or relocation fees in time, you can easily broker a property sale deal with confidence. For more information visit our website Redhead Home Properties.
There are several rights of the tenants which may vary across the U.S. states but most common are:
Tenants have the right to get a relocation fee when landlord is selling the property. But in states like South California this right is not applicable.
To ensure the privacy of tenants, you must inform the tenants 24-48 hours before the property showing.
Yes, there are certain cases where tenant can sue the landlord in small claims court, such as:
A tenant has the first right to buy your property when it’s for sale. This is applicable in certain states, like Washington DC, where a landlord must send a letter of intent to sell.
