A Guide to Selling a House With Tenants North Carolina

Do you have a rental property you need to sell, but not sure how to sell a tenant occupied house? In this article we will discuss how to sell a house with tenants in North Carolina and how the current lease (or lack thereof) impacts the sale.

Table of contents

1. Selling a house with tenants North Carolina
2. Can you sell a house with tenants in North Carolina?
3. Challenges when selling a house with tenants North Carolina
4. How to sell a house with tenants North Carolina
5. Tenants rights when landlord sells property North Carolina
6. How much notice does a landlord have to give a tenant to move out in North Carolina?
7. What if a tenant refuses to leave?
8. Eviction process in North Carolina
9. Tips for a smooth sale when selling a house with tenants in North Carolina
10. Conclusion: Selling a house with tenants North Carolina

Selling a house with tenants North Carolina

If you’re no longer wanting to be a landlord in North Carolina you’ve probably contemplated listing your property for sale. However, if you still have a tenant occupying the premises, this endeavor can become filled with challenges. Legal complications may arise, potentially causing delays or hindrances in the sale process.

When selling a house with tenants, you have several avenues to explore: wait until the lease naturally concludes, discuss early departure with the tenant, terminate the lease, offer the property to the tenant, engage a real estate agent, or sell to an investor. Selling to an investor stands out as the most convenient option, as it eliminates the need to request tenants to vacate the premises.

For a comprehensive guide to selling a property with tenant, be sure to keep reading! In addition to the aforementioned options, we’ve included some valuable tips to help ensure a seamless sale of your property.

Tip From the Author:
Selling a House with Tenants in North Carolina

As a rental property owner, a fix-and-flip investor, and realtor, I have gained nearly a decade of experience to know the intricacies of selling a house with tenants in North Carolina. I have personally been involved (either as buyer, seller, or realtor) in over 100 transactions involving rental property since 2017. Here are a few tips I’d recommend to get the most out of selling a house with tenants:

• If possible, wait until the lease expires to sell the property. Although it’s not required, this will result in a more marketable property by expanding your buyer pool to those who may not be looking for investment property
• Communicate your intentions to your tenant so they are not caught off guard. You will need their cooperation for a successful sale. There should be no reason for concern as their lease should no be effected by the sale.
• Schedule assigned showings (open houses) to get prospective buyers in at one time. This alleviates scheduling conflicts for the tenant resulting in more cooperation.
• Maintain your rental property with scheduled maintenance and repairs. This preserves the home’s value and allows you to charge market rental rates which become a major factor in the eventual sales price.

We’ve helped many landlords sell their occupied rental houses. Hopefully these tips and information help you too!

-Jason Hill, Freedom Choice Investments

Can you sell a house with tenants in North Carolina?

Absolutely. It is entirely legal to sell a house with tenants in North Carolina, even if still occupied at closing. In fact, it’s quite common for real estate transactions to involve a transfer of property with tenants still in place.

The timing of the sale largely hinges on the terms outlined in the lease agreement with the current tenant. If your tenant is on a month-to-month lease and they are cooperative, selling the rental property should pose minimal challenges. However, if the tenant is on a fixed-term lease, the sale process could be more intricate and time-consuming.

We will delve deeper into these two primary types of leases in a subsequent section of this article.

Challenges when selling a house with tenants North Carolina

Selling a house with tenants can be an intimidating task if you don’t know what you’re up against. In this section, we will cover the most common challenges we see when a landlord is attempting to sell a tenant occupied rental property in North Carolina.

Tenant Cooperation

Tenant cooperation can be unpredictable. Some tenants may not be keen on the idea of the property being sold, leading to potential difficulties in scheduling showings or maintaining the property in market-ready condition.

Lease Restrictions

Lease agreements can pose challenges, particularly if tenants are on long-term leases. Selling a property with tenants on fixed-term leases may limit potential buyers or require negotiation with tenants for early termination.

Market Perception

Some buyers may perceive a property with tenants as less desirable, especially if they prefer vacant possession. This perception can affect the property’s marketability and potentially impact its sale price.

Lower Sales Price

Prospective buyers might make conservative offers due to the perceived risk associated with an occupied rental property, particularly concerning existing tenants whose reliability in rent payment is uncertain upon the change of ownership.

Legal Considerations

North Carolina landlord-tenant laws and regulations must be carefully navigated during the sale process. Ensuring compliance with legal requirements regarding tenant rights, lease termination, and disclosures is essential to avoid complications or legal disputes.

Addressing these challenges requires careful planning, clear communication with tenants, and potentially seeking professional guidance from real estate agents or legal experts familiar with North Carolina’s landlord-tenant laws.

How to sell a house with tenants North Carolina

Earlier, we mentioned that the process and timeline of selling a tenant occupied house depends on the type of rental agreement you signed with your tenant. In this section, we have detailed your options of selling a house with tenants depending on your lease agreement.

Wait until the lease expires

If you’re not in a rush to list your rental property on the real estate market and it’s still generating good cash flow, it’s advisable to wait until the lease expires. There are several advantages to this approach.

Firstly, you have the opportunity to undertake repairs and upgrades on the vacant property without inconveniencing any tenants. Enhancing the property’s appearance can lead to a higher asking price. Even if you postpone selling for several months, you stand to gain more financially.

Additionally, waiting for tenants to vacate enables you to maximize the property’s rental potential by adjusting the rent upward. This can increase the buyer’s potential rental income, thereby elevating the property’s value.

However, a drawback of waiting for the lease to end is the continued responsibility for mortgage payments and property taxes. You’ll still need to cover these expenses until the lease term concludes, which could pose challenges if it extends for several more years.

Offer incentive to tenant for early move out

If you have a definite buyer lined up and are eager to settle the lease, negotiating with your tenant for an early move-out can be an advantageous option. Early move-out entails requesting the tenant to vacate the premises before the lease term concludes.

It’s important to note that the tenant retains the right to decline your proposal. Nonetheless, offering incentives can significantly increase the likelihood of their agreement. Here are some creative incentive options:

• Cover Rent Difference: If your tenant hesitates to move due to higher rental costs at their prospective new residence, consider covering the difference in rent. This arrangement would encompass the remaining months of their fixed-term lease.
• Cover Moving Costs: Moving out of your rental property can impose financial strain on the tenant. Bearing their moving expenses can serve as a reasonable incentive.
• Cover Security Deposit: Transitioning to a new rental often necessitates a security deposit payment. Offering to cover this deposit can motivate the tenant to agree to an early move-out.
• Offer a Payout: While offering a payout is a more costly approach, it can be effective. The payout amount should be calculated based on your rental income and the potential proceeds from the property sale. However, exercise caution as some tenants may accept the payout and prolong the eviction process, leading to lengthy delays.

Sell to tenant

If your long-term tenant has a strong attachment to the property, persuading them to move out may prove challenging. In such instances, selling the house to them could be a viable solution, offering one of the quickest and simplest ways to sell a house with tenants. Here are some creative options you can use to facilitate a smooth transition while providing your tenant with an opportunity to become a homeowner:

• Lease-to-Own: Under a lease-to-own arrangement, the tenant agrees to eventually purchase the rental property. Their monthly rental payments serve as a down payment towards the eventual purchase.
• Seller Financing Agreement: With seller financing, you assume the role of the lender for your current tenant. This entails collecting a down payment from the tenant, along with regular monthly mortgage payments. In the event of default, you retain the right to reclaim ownership of the rental property.
• Lease-to-Own with a Non-Refundable Option Fee: In this scenario, the tenant pays an additional fee on top of their rent, granting them the option to purchase the property at a later date. This fee is non-refundable and provides the tenant with added incentive to maintain consistent payments.

Terminate the lease

Many lease agreements include an early termination clause, which allows for the lease to be ended within 30, 60, or 90 days following the sale of the rental property. This clause is flexible and can be invoked for any reasonable cause agreeable to both parties.

Hire a real estate agent

As previously discussed, it’s entirely permissible to sell a tenant occupied house through the traditional real estate market. In such cases, enlisting the assistance of a real estate agent can prove invaluable.

However, it’s important to acknowledge the challenge of finding prospective buyers who are willing to purchase a property with existing tenants. Despite the expertise of a skilled real estate agent, securing a favorable offer may take time, as many retail buyers prefer homes that are vacant and ready for immediate occupancy.

Sell to a cash home buyer or investor

Selling your rental property to a cash buyer or real estate investor presents the most advantageous option when selling a house with tenants. These buyers actively seek investment opportunities to expand their rental portfolios. Furthermore, having existing tenants can prove advantageous for many real estate investors, streamlining the process by eliminating the need to search for new renters. It’s crucial to note that these buyers prioritize a high return on investment and rapid cash flow.

In addition to purchasing properties with tenants, real estate investors commonly acquire properties in as-is condition. This means you won’t be pressured to undertake any repairs or renovations before selling your tenant occupied property.

Tenants rights when landlord sells property North Carolina

In North Carolina, tenants are entitled to certain rights. These rights encompass residing in a habitable space, being provided with adequate notice prior to landlord entry, and safeguarding against unjust eviction. Additionally, tenants have the right to prompt repairs and may withhold rent under specific circumstances if the landlord neglects property maintenance.

How much notice does a landlord have to give a tenant to move out in North Carolina?

North Carolina’s landlord-tenant regulations outline the obligations of landlords regarding lease termination or modification notifications to renters. Landlords are required to inform tenants of any intentions to terminate or modify the lease within specified timeframes.

• Year-to-year lease (or other definitive time): 30 days notice
• Month-to-month lease: 7 days notice
• No lease, verbal lease, or less than 30 days: 2 days notice
• Mobile home leases: 60 days notice

What if a tenant refuses to leave?

Despite a landlord’s efforts to maintain open communication with their tenants, they may remain strongly opposed to the idea of leaving. Various reasons could contribute to their reluctance, such as attachment to the school district, financial constraints associated with moving expenses, or the need to be close to family members. This can potentially make them the perfect candidate as a buyer. We suggest offering to sell to them first.

If that fails, you can consider offering the tenant an incentive to move. With the right nudge, your tenant may be open to moving. If there is a financial advantage to a move, their willingness to cooperate is likely to increase.

Numerous creative solutions exist to incentivize a move. Offering to waive the last month’s rent, covering the initial month’s rent elsewhere, or lowering the current rental rate are effective methods to garner their cooperation.

Anticipate encountering some level of resistance when discussing relocation with your tenants. However, proactive and transparent communication can often alleviate much of their hesitancy.

As a last resort, you may have to resort to the eviction process.

Eviction process in North Carolina

A tenant in North Carolina cannot be evicted without the landlord obtaining a court order. This legal procedure, known as “Summary Ejectment,” is followed by the landlord to obtain the necessary court order for eviction.

Reasons a landlord can evict a tenant in North Carolina

1. Non-payment of rent
2. Lease Termination
3. Breach of Lease

Landlord cannot legally evict a tenant if… (known as Retaliatory Eviction)

1. Complaining about bad conditions
2. Requesting repairs
3. Complaining to a government agency about violations of health or safety laws or any other law
4. Joining a tenant’s organization
5. Trying to enforce your rights under the lease

Steps to eviction (summary ejectment) process in North Carolina

1. The landlord initiates a Summary Ejectment Complaint after serving notice to tenant.
2. Following this, the tenant will receive a “Summons” from the court, providing details of the court appearance. The Summons includes a copy of the Complaint.
3. A hearing is scheduled, typically presided over by a magistrate, who will assess the case. Both parties have the opportunity to present their arguments. The landlord may seek eviction, monetary compensation, or both.
4. The magistrate renders a decision. If eviction is granted, a “judgment for possession” is issued. Additionally, the magistrate may order payment of rent arrears and damages, capped at $4,000, termed a “money judgment.”
5. Following the magistrate’s decision, you have a 10-day window to appeal. To appeal, you must submit a written request, available from the court clerk. By following specific procedures, you can prevent eviction while your appeal is pending.

Tips for a smooth sale when selling a house with tenants in North Carolina

When selling a house with tenants in North Carolina, encountering an uncooperative tenant can be a significant concern. Pressuring them to vacate their primary residence aggressively may lead to legal repercussions, as they could potentially use the lease agreement to initiate legal action against you.

Given that you are essentially asking the tenant for cooperation to facilitate the sale, it’s crucial to exercise caution when communicating with them. To navigate this situation effectively, consider the following tips to ensure proper handling of the tenants and promote a smoother sale.

Transparency with tenant

Out of respect to the tenant and for ideal cooperation, we advise meeting with the tenant in person (if possible) as well as send a written letter clearly explaining your intentions of selling the property. This isn’t a time to make demands as you will need tenant cooperation throughout this process. Instead, treat them the way you would want a landlord to treat you and your family when abruptly receiving a notice like this. Be sure to convey what was agreed to in the lease terms and be sure to understand and respect the legal rights they have as a tenant.

Maintaining the rental property

This is a tip that should be practiced throughout the entirety of the lease term in order to have pleasant cooperation from the tenant when the need arises to sell a tenant occupied house. Be sure to take responsibility for upkeep and cleanliness of the property according to the lease terms. Respond to all tenant complaints and work orders in a timely manner.

Respect tenant schedule and privacy

It can be a burden for a tenant to open their living quarters to strangers. As much as possible (and as the lease allows) try to schedule showings with prospective buyers according to the tenants work/life schedule. We advise open houses as a way of showing the house to allow for multiple buyers to view the home at one centralized time. This will also allow for you to be present at the time of showing, as opposed to the tenant, which can be beneficial at times.

In addition, if tenant’s wish to maintain privacy, avoiding “For Sale” signs can be a nice gesture.

Ensuring timely rent payments to maintain property value

When selling a house with tenants, it should be expected that prospective buyer’s will ask for up to date rent rolls to help determine the property’s value. You want to have at least 12 months of consistent and timely rent receipts to show the buyer the potential of the home as an investment property.

Tenant assistance

Depending on your knowledge and resources, you should assist the tenant in identifying new rental accommodations as much as possible. Additionally, communicating with tenants post-sale regarding payment and new ownership introductions is advised.

Conclusion: Selling a house with tenants North Carolina

Selling a house with tenants can present complexities. Your decision to sell may not align with your tenants’ readiness to relocate. Fortunately, various real estate strategies exist to facilitate a smooth transition beneficial to all parties involved.

Regardless of the chosen approach, open communication with your tenant from the outset is essential for fostering trust and securing their cooperation throughout the process.

If you encounter ongoing challenges, selling a house with tenants to a real estate investor may offer the best solution. Real estate investors are often willing to assume the role of landlord for existing tenants or facilitate their departure from the property. Additionally, they typically do not require repairs to be made before closing the sale.

These findings apply to all cities and towns in North Carolina, including Raleigh, Durham, Fayetteville, Johnston County, Sanford, Burlington, and surrounding areas.

Author: Jason Hill

I am a seasoned real estate agent and investor with nearly a decade of experience helping landlords sell a house with tenants in North Carolina. As the founder of Freedom Choice Investments my mission is to deliver simple and hassle free selling solutions to North Carolina homeowners. With the ability to either list your house or buy it as-is we have a unique offering that caters to those looking for ways to sell a tenant occupied house in North Carolina.