Selling a home that is currently occupied by tenants can be a complex process. While it is entirely possible to sell a tenanted property, landlords must navigate legal, financial, and interpersonal challenges.
READ: Rental agreement: Here’s what you need to know
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, one of the biggest challenges is the existing lease agreement. “If the tenants have a fixed-term lease, the new buyer must honour that lease until it expires or the tenant decides to move out. This can limit the pool of potential buyers to investors rather than owner-occupiers,” he notes.
Goslett adds that it is possible for a buyer to stipulate that the property must be vacant before transfer can proceed. In this case, if the homeowner accepts the offer, it will be their responsibility to ensure that the tenant vacates before the sale can be finalised. The homeowner needs to consider carefully what is stipulated in the lease agreement regarding early cancellation and cannot act unlawfully to evict the tenants early.
To avoid these kinds of complications, if possible, Goslett encourages sellers to consider listing the property when the lease is about to expire. “If the sale cannot wait, then have an honest conversation with your tenant and offer incentives such as a reduced rental rate, moving assistance, or financial compensation for their cooperation to end the lease early,” he suggests.
READ: 5 key questions to ask before signing a lease
The next hurdle is to arrange showings, inspections, and valuations, which can be disruptive for tenants. If they are uncooperative, it can be difficult to present the property in the best light. “As challenging as it may be to work around a tenant’s schedule, it is vital to respect their rights to avoid complicated legal issues. Keeping tenants informed about the sale process can also help ensure their cooperation. Working through a rental agent can alleviate some of the stress and give the homeowner one less thing to have to worry about,” Goslett advises.
On the other hand, marketing a property solely to real estate investors who are looking for rental income can be a practical solution. “Investors may see value in purchasing a property with an existing, stable tenant. In the listing description, highlight that the property comes with a reliable, long-standing tenant,” says Goslett.
Selling a home with tenants can be challenging, but with clear communication, legal awareness, and strategic planning, landlords can successfully navigate the process.
“Whether selling to an investor or waiting for the lease to expire, the key is to balance the needs of both the tenant and the buyer to ensure a seamless transaction. Enlisting the help of a reliable real estate professional can make the whole process run a lot smoother,” says Goslett.
READ: Landlords: A guide to finding the ideal rental candidates
Additional information:
According to the Department of Human Settlements, a Rental Housing Tribunal has the authority to deal with disputes, complaints or problems between tenants and landlords in the rental housing dwellings:
- Non-payment of rentals
- Failure to refund the deposit
- Invasion of tenant’s privacy, including family members and visitors
- Unlawful seizure of tenant’s goods
- Discrimination by landlord against prospective tenants
- The changing of locks
- Lack of maintenance and repairs
- Illegal evictions
- Illegal lockout or illegal disconnection of services
- Damage to property
- Demolition and conversion
- Forced entry
- House rules
- Intimidation
- Issuing of receipts
- Municipal services
- Nuisance
- Overcrowding and health matters
In terms of section 13(13) of the Rental Housing Act 50 of 1999, a ruling of the Tribunal is deemed to be an order of a Magistrate's Court in terms of the Magistrate's Court Act, 1994.
* Disclaimer: The articles on these web pages are provided for general information purposes only. Whilst care has been taken to ensure accuracy, the content provided is not intended to stand alone as legal advice. Always consult a suitably qualified attorney on any specific legal problem or matter.
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