Pat Hune, Broker, 1st Southwest Realty, November 2018
Recently an investor was buying a fourplex. During the inspection two of the units were in terrible condition. The investor was appalled at how the tenants were living and wanted then out as soon as possible. He even asked the seller to serve the tenants notice prior to close of escrow so he could get the tenants out so he could start renovating the apartments and minimize the amount of lost rent. What is the process to get tenants out?
1) If the tenant’s lease does not expire for several months the tenants have the right to continue to live there until the lease expires. When the property changes ownership the tenants get something called the right of quiet enjoyment. This means the landlord cannot break the lease unless the tenant agrees. The landlord has to give the tenants notice of non-renewal at least 30 days before the expiration of the lease. The way the 30 day notice period works is if the lease expires on December 31st then the tenants must receive written notice by no later than November 30th.
2) If the tenant’s lease has expired then the tenancy is month to month. Most leases have a clause that says the lease will continue as a month to month lease after expiration. In this case the landlord can give the tenants a 30 days notice (as described in Section 1) and the tenants must vacate by the last day of the month.
3) The buyer can ask the seller to give the tenants notice prior to close of escrow but it is unlikely the seller would agree. The reason is if the buyer fails to close escrow then the seller may end up with vacant units and units that need a lot work. Most investors want to buy fully occupied properties so they have instant income. They don’t want to buy a property where is send a lot of money and lose rent.
A lot of investors are selling their investment properties because of the increase in the properties value. As a result the number of rental properties is going down. There is a shortage of affordable rental properties ,especially single family homes, but even some apartments have high rents. If you are a landlord be prepared for the tenants to ask for more time to find another rental.