So your landlord has just given you noticed that they intend to sell the home you are living in. What to do now? This is the question you might be asking yourself because you just got noticed that the Landlord is getting ready to sell. There could be a number of reasons the Landlord is deciding to sell. Some of the reasons could be to pay off the existing mortgage that they have on the property. It could be because they have been doing the Rental business a long time and they are getting ready to retire. They could be dealing with a divorce.
One thing that you have to keep in mind is that Landlords are people too. A lot of time we think of Landlords as the Landlords from Hell or the Slump Lords that want to fix nothing. Or the Landlords who are always trying to be noisy. Keep in mind that there are some good Landlords who have a passion and who are about doing things necessary to make their properties better. Then you also have to understand that being a Landlord is also a business. And because it is a business of cash flow. If there is no cash flow then the business is bleeding red ink.
It’s just how you feel when you are paying your own bills when you receive that high electric bill and have to pay more on it than normal. When you find yourself bleeding red then you know how that feels. It’s not a good feeling to experience that right? Then that’s exactly how the Landlord feels. When there is no rent coming in or for some reason other bills have increased and they are no longer able to manage the rental property.
So your question is what are my rights if my landlord decides to sell? The answer is yes they can sell the property. But the other part to that question is you have to go back to when your lease expires. That means you need to read your lease agreement to determine some of the answers. In your lease agreement, there are clauses in it that talk about selling the home or the tenant has the first right of refusal. If you have never seen that language in the agreement then you will need to go back and read to see exactly what the lease agreement says.
What is the first right of refusal?
The first right of refusal is when you have the first chance at buying the home if the landlord decides to sell the property. Right of first refusal means that you have agreed to purchase the property before anyone else will. This is quite common in real estate transactions as it gives the buyer a strong sense of ownership, a sense of security. The purchaser has the option of simply walking away without completing the transaction or negotiating terms with the landlord to buy the property at a certain price or discount. This right of first refusal is a strong negotiating point as all other offers are considered and evaluated based on the buyer’s decision to take the first offer.
Why Should I Care?
The first right of refusal has become more important in recent years as a result of the recession and the widespread negative impact on the real estate market. Buyers are feeling more and more frustrated with the lack of available properties. You should also care because you are the tenant that’s living in the home. Why not try to own the home. You know exactly what’s wrong with the property. You have lived in the property for a while and you are the one who will have to move if you don’t choose to purchase the home. It takes some of the pressure of knowing that you have the first chance at owning the home.
What Are Your Rights?
When you are reviewing your lease agreement one thing to pay attention to is the paragraph that talks about default. If for some reason you are behind on your mortgage then you are considered to be in default. Keep in mind always seek the advice of a Real Estate Attorney who can help you understand what your rights are under your lease agreement. If you are in default then the Landlord can exercise their right under the default paragraph in your lease agreement.
If you bring your default current and you’re no longer behind on payments, then more than like the Landlord will wait until you are closer to the end of the lease terms to give you notice that they are not renewing the lease.
What Happens If The Property Is Sold While I’m Still Here?
If you happen to receive a letter that your Landlord has sold the property then there is a chance that you will get some type of notice or phone call from the new owners. In some instances, the new owner might be an investor who would allow you to remain in the property and continue to pay the lease. Then there are other times when it could be someone who wants to live in the property and they give you notice and possibly give you time to relocate.
Be Proactive
Remember to be proactive. If somehow you learn that the owner is wanting to sell the home and your credit is around 580 or high then you might want to consider possibly purchasing the property from your Landlord. What better way to have peace of mind when you can buy the property. Remember, if you don’t know the first thing about getting a loan then check out how to get FHA approval.
Make sure the property condition is in average to good condition. If it is in average to good condition then the property should go FHA or Conventional. If you know the home has holes in the wall, torn carpet, missing roof, or anything of that nature then it’s possible it might not qualify for FHA financing. Also, you have to make sure the home will meet the lender’s requirements. If for some reason the home is in need of a lot of repairs, then you can think about doing FHA 203k loan. This is a loan that is set aside for homes that need work. You can use this loan to repair the home and bring property condition up to average to good condition.
Final Thoughts
It can be frustrating and hard when you are the tenant trying to figure out what to do next when your landlord wants to sell their property. Remember, what we discussed in reference to adding first right or refuse to the lease agreement. When you do this you are making sure that you have the first right to purchase the property. The goal is to seek homeownership. To do that you have to make sure that you are doing the right things necessary to put yourself in a position to win.