Scared Your Landlord Will Sell Your Rental House? Here’s How To Deal
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Two years into renting a single-family home in San Diego, my sister started seeing “For Sale” signs popping up all over her neighborhood. She, her husband, and their four children had been living comfortably in a 2,200-square-foot house on a month-to-month lease. But panic set in when she noticed that the houses on her street were landing on the market and selling within a few days for over the asking price.
Ongoing news about the surging home prices in San Diego (where the median sale price is $910,000) didn’t help either. One question weighed heavy on my sister’s mind: Would the owner of the house she’s renting jump into the hot seller’s market, too?
Then it happened. My sister got the call that the homeowner would be putting the property up for sale and gave them a verbal 60-day notice to vacate. At that point, they had two choices: Buy the house or find a new place to live.
The next two weeks were a crash course in tenant rights and crunching the numbers to figure out their next move. Here’s what they learned.
Ana Durrani
Don’t panic—you have tenant rights
If you’re renting a single-family home or condominium in a housing market that favors sellers, you’ve probably been playing a similar scenario in your head. You might even be losing sleep, thinking it’s only a matter of time before your landlord decides to sell your home and force you to find new housing.
But it’s important to remember that you have basic tenant rights. Landlords can’t threaten eviction, cut off water or electricity, enter the property unannounced, or hire a remodeling crew to work into the wee hours until your lease term is over. If you signed a lease agreement, your landlord must honor the terms.
Many states require landlords whose renters have a month-to-month lease to provide a 30-day notice to vacate. Luckily for my sister, California is one of the most tenant-friendly states in the U.S., and month-to-month tenants who have resided in the property for at least a year are to be given a 60-day warning and it must be in writing. Check your state’s landlord-tenant laws to see where you stand.
You might not have to move if…
If you signed a fixed-term lease, you might have the legal right to remain in the house even if it sells before your lease is up. The new owner must adhere to the legally binding contract, and you will have to sign a new lease with the new owner once the sale goes through.
However, if your rental contract contains a “lease termination due to sale” clause, your long-term lease might not be protected. If the clause says you have 30 days to move once a sale goes through, you’re required to move out, regardless of how much time you have left on your lease. If you need help clarifying your lease, consult a tenant lawyer or local housing authority.
Option 1. Find another rental
Before deciding to buy the house, my sister searched for other rentals in the area. She and her family were paying $2,700 a month for their four-bedroom house, and perhaps they could secure another home to lease that was comparable in square footage and price.
But all she found were sky-high monthly rents upward of $4,000 for a townhouse or condo, and $5,000 for a single-family home. She also learned that the single-family rental market was extremely competitive. At one point my sister put her name on a 35-person waiting list to rent a house, with prospective tenants already outbidding one another.
Option 2. Buy the house you’re renting
Even though my sister and her family had been casually looking for properties before and during the COVID-19 pandemic, they never even considered buying the house they were renting. But after calculating that a mortgage payment would be equivalent to paying monthly rent on a comparable property—and hearing that the owner was willing to give them first dibs on the home if they wanted to buy it—they decided to put in an offer.
The home was built in 1994 and had a number of issues, so my sister and her husband initially offered $860,000 to buy the home as is. Their offer was rejected; but two long weeks later, the homeowner let them know he wanted $960,000 as is.
Before making a decision, they consulted a real estate agent to get a better understanding of the local market, whether the house was worth the asking price, and where they could negotiate. They decided their best move was to buy the house and eventually flip it. They countered at $910,000, as is, and their offer was accepted.
My sister is now a happy homeowner, but she took a unique path to get there. If you find yourself in a similar situation, prepare to do a ton of research on your city’s housing market, and be sure to weigh your options with the guidance of a local real estate agent. You can never have too much information when trying to choose the path that makes the most financial sense.
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