With mortgage rates now significantly topping 8%, you would think that homebuyer demand would be decreasing. However, the unusually persistent low inventory of homes for sale has kept prices from falling because demand continues to outpace supply. So what about buying or selling tenant occupied properties, including homes, townhouses or condos? If you’re looking to buy, should you consider the hassle of purchasing a property that has a tenant? If you own a rental and are thinking about selling, should you cash out the equity since housing prices still remain high?
For buyers competing in the limited supply of housing for sale, if the perfect property you wish to purchase is currently inhabited by a tenant, there are additional considerations and challenges. On the other side of the transaction, property owners who are selling, must be able to navigate and comply with tenant protection laws in Oregon. In either event, consultation with an attorney is advised. With Stephanie’s law license, we can answer our client’s questions with professionalism and accuracy. Other real estate agents cannot review lease documents or advise on a specific landlord-tenant arrangements unless they are also licensed to practice law.
The following considerations apply:
- Type of tenancy (month-to-month, or fixed term);
- The length of occupancy time (especially if less than one year);
- The expiration date of the tenancy term; and
- The rights of the tenant under the specific lease contract.
Oregon law is very tenant-protective with respect to termination. Among other things, if a tenant has lived in the dwelling for more than one year, the owner/landlord cannot terminate the tenancy for “no cause,” but must have a “qualifying landlord” reason.
If an owner/landlord wants to sell tenant-occupied property and terminate the existing tenancy, that owner can only do so if the buyer intends to reside in the home after closing. If a buyer purchasing a tenant occupied home wants to re-rent the property to a different occupant, that would not be a “qualifying landlord reason” to terminate. In addition to establishing a “qualifying landlord reason,” the owner must provide appropriate advance notice of termination to the tenant. The notice period varies based on the type of tenancy.
A buyer could request that the seller work with the seller’s tenant to determine whether they would consider voluntarily surrendering the property prior to the end of the term. In some cases, this may be necessary for the transaction if the buyer is financing the purchase. Residential property lenders typically require that the home be buyer-occupied within 60 days of closing.
It goes without saying that many properties that have been rented out before sale require repairs and TLC, including paint, drywall repair, flooring, light fixture work, and attention to doors, windows, trim, etc. WIth Frank’s general residential contractor’s license, we can include most handyman services as part of the transaction, whether you are buying or selling.
When considering buying or selling a tenant occupied home, you need real estate agents like us that can communicate and cooperate with all affected parties. Proceed with confidence knowing you’re in the hands of knowledgeable real estate brokers, an attorney who can advise you on the intricacies of landlord-tenant law, and a contractor who can help repair the wear and tear of prior tenancies. With a reliable team helping you through the process, the additional challenges posed by transactions involving tenant occupied properties can be addressed, whether you are looking to sell your leased property, buy a home to live in, or purchase a place for investment purposes.
