Selling a house with tenants in it

Selling to us doesn't require you to do any of this. We buy as is, and a title company handles the closing paperwork. This guide is only here if you want to understand the rules.

What happens to the lease?

In Minnesota, the clearest text we read is on the deposit: the buyer takes on the landlord's rights and duties for it. We didn't locate a statute that says in so many words that a lease continues after a sale. Landlords and buyers commonly work on that assumption, and your attorney can confirm it for your lease.

Superior differs: Wisconsin says it outright. Lease terms not personal to the original parties are enforceable by or against a successor, and selling doesn't release you unless the lease or the tenant does.

Read the lease itself before anything else. Some carry a clause on sale, a purchase option, or a right to renew. Those change what you can promise a buyer.

Do I need the tenants' permission?

We didn't find any Minnesota or Wisconsin rule requiring it for an ordinary rental sale. Nor did we find a general right of first refusal for tenants in either state. The one we did find is narrow: Wisconsin tenants get a first right to buy in a condominium conversion. Your lease could grant more by contract, so check it.

A tenant can still make a sale harder, usually by not being home, not cooperating, or going quiet. It helps to tell them early and to treat them well. Often a good tenant is what a buyer most wants to keep.

How much notice for a walk-through?

This matters even when nobody calls it a showing. An appraiser, a contractor, an inspector, or a buyer like us walking through is an entry into someone's home.

In Minnesota you need a reasonable business purpose and a good-faith effort at notice of at least 24 hours. Showing a prospective buyer qualifies. The notice must state a time or window, and entry runs 8 a.m. to 8 p.m. unless you both agree otherwise.

Skipping it isn't a small thing. The penalty can include a rent reduction up to ending the lease, and up to $500 per violation plus attorney fees.

Superior differs: the state rule sets advance notice at 12 hours, unless the tenant agrees to less.

Selling to us: a direct sale means no public showings and no strangers on a Sunday, but we still need one visit. That visit gets proper notice to your tenant, the same as anyone else's would.

What should I tell tenants, and when?

We'd tell them before they hear it from a stranger at the door. A short, plain note helps: the house may be sold, keep paying rent the same way until you're told in writing where it goes, and here's who to call.

After the sale, tenants have to learn who the new owner is:

• Minnesota: once the deposit moves, tell them about the transfer and give the new owner's name and address. Minnesota's general rule is that tenants get the manager's and owner's or agent's names and addresses in writing.
• Wisconsin: written notice of owner or manager changes within 10 business days.

Spell out rent, too. Say the date rent starts going to the new owner, and how the month of closing is split. Put it in the closing paperwork so nobody has to argue later.

Does it change the price?

It can, in either direction. A long-term tenant paying a fair rent can be exactly what an investor wants. A below-market lease with a long way to run can pull the price down, because the buyer is stuck with that rent. A retail buyer who wants to move in usually can't use your house until the lease ends, which narrows who will buy.

That's why the tenant situation shows up first on this site. If you want to compare options, this page lays them out.

What if there's an open code order?

In Minnesota, you must give the buyer copies of outstanding health-and-safety inspection and condemnation orders before they take ownership. Don't assume a buyer already knows. Dig out the paperwork early.

A tenant's recent complaint is a separate hazard if you're thinking about moving them out. Minnesota puts the burden on the landlord when an eviction follows a complaint within 90 days. Talk to an attorney first.