Home Buying in Temple Hills>Question Details

Reggie21, Renter in Temple Hills, MD

Is it legal to sale a property when there is a tenant in the unit paying rent? Why would someone want to sale the unit if its making money?

Asked by Reggie21, Temple Hills, MD Mon Sep 19, 2011

Help the community by answering this question:


Don Tepper’s answer
It's "sell," not "sale."

Yes, it's legal.

Why would someone want to sell a rented property:

--Maybe it's not "making money." Maybe the mortgage is, say, $1,800, and the renter is only paying $1,600. That's $200 negative cash flow right there. When you factor in repairs, potential vacancies, etc., it's probably closer to $400 a month negative.

--Maybe the owner needs the money. Suppose the house is worth $300,000 and the owner owes $200,000. Maybe the owner has some medical expenses. Or needs money for a child's school tuition. If he sells, he'll get (after commissions and other things) maybe $70,000 in cash. That may meet his needs a lot more than getting a couple hundred dollars a month in positive cash flow.

--Maybe the owner has a better investment possibility. Maybe the owner is getting an 8% return on investment. Now he has the opportunity to make a 12% return. That's a 50% increase (from 8% to 12%).

--Maybe the owner is retiring. Or at least tired of managing rentals.

In other words, there are lots of reasons. But the real point is: For whatever reason, your landlord has decided to sell.

The good news is that generally your lease carries over to the new owner. Certainly check your lease to make sure there isn't something in there saying otherwise. But generally a valid lease remains valid and binding on both the tenant and the [new] owner. Now, either your current landlord or the new owner may want you to move. They may even offer you money to move . . . which you can take, if you feel like it. But likely you're in the driver's seat if you want to keep renting there through the end of your lease.

Hope taht helps.
1 vote Thank Flag Link Mon Sep 19, 2011
Don Tepper, Real Estate Pro in Burke, VA

My colleagues have answered your question below. Check your lease agreement to see if there is any clause or verbage in there regarding the validity of your lease in the event the home sells. Also, check to see what your rights are while the home is on the market, there is likely verbage stating that you will allow access to the home for showings within "x" amount of time of the lease expiration.

It is likely that the home will be marketed with the information that the new owner will be required to honor your lease until end of term.

Good luck!
0 votes Thank Flag Link Mon Sep 19, 2011
I'm a bit rusty on the latest rules, but I believe most Maryland counties require the seller to offer the home to the current tenant first...a right of first refusal. Most title companies will not close the transaction (especially for Baltimore City homes) unless something is signed notating that the tenant has received the right of first refusal and declined to purchase or try to purchase. It's my understanding that if the current tenant is interested and believes to be able to purchase, the seller may be required to allow for adequate time for the tenant to get their financing together. This may be something exclusive to Baltimore City and not applicable to other counties...like I said I'm a bit rusty on this particular issue.
0 votes Thank Flag Link Mon Sep 19, 2011
Hi Reggie,

It is absolutely legal and there are many reasons they would want to sell it including to free up money that was put down on the property aka equity.
0 votes Thank Flag Link Mon Sep 19, 2011
The landlord is free to sell anytime he/she wishes....
0 votes Thank Flag Link Mon Sep 19, 2011
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