Selling a Miami condo with a tenant can be difficult, but it's not impossible. You'll need to clearly understand the tenant's rights and have clear communication with your tenant. You'll also need to have all your paperwork, including the lease agreement. This article will go over what you need to do when selling a condo in Miami with a tenant in place.
In this article
Gather your lease agreement
Notify the tenant that you intend to sell the condo
Introduce your tenant and your real estate agent
What to do if the tenant isn't complying?
Make sure the condo is in good condition
Coordinating showings with your tenant
Inspection, appraisal, and walkthrough
What is a Tenant Estoppel?
Advanced rent and security deposits
Assignment of lease
Gather your lease agreement
Before you do anything, you should review the lease agreement with your tenant. If you've used a Florida Realtors/Florida Bar (FR/Bar) lease agreement, the chances are that the new owner must carry out the lease. If there was an addendum place or you used another type of lease, the tenant may have agreed to vacate the unit at the time of a sale.
The buyer may ask for a copy of the lease, and you may be required to provide the lease to the buyer. In the Florida Realtors/Florida Bar (FR/BAR) Sales and Purchase contract, owners must provide the lease to the buyer within a specific amount of days after the effective date. The buyer will review and has an option to terminate the contract.
Notify the tenant that you intend to sell the condo
If you're planning on selling your condo, it's good to start talking to your tenant about it as soon as possible. The tenant may be open to moving out early or at least being flexible with showings. If you and the tenant can come to some kind of agreement, it will make selling your condo much more manageable.
The best way to notify the tenant that you will be selling the condo is to send them a letter and send them an email. In the letter, you should state your intentions and how they may affect the tenant. You should also include your contact information if the tenant has any questions or concerns.
The letter and email should include:
Reason for the letter
Formal language
Give the tenant options to vacate
Establish expectations with your tenant
Ask for specific times and dates that will be best for the tenant
Give incentives for cooperation
Introduce your tenant and your real estate agent
If you're listing your condo with a real estate agent, introducing your tenant and real estate agent is crucial for the selling process. When giving the introduction, you allow the tenant to meet the person handling the listing. It also allows the tenant to ask any questions about the sale and allows you, your agent, and the tenant to discuss a plan.
Your real estate agent should be professional and courteous with the tenant. They should also know the law and how to sell a condo with a tenant. With more and more buyers making offers on condos for sale based on marketing, hiring an agent that knows how to market in this new digital landscape can help minimize the need for showings with high-quality photos, walkthrough video, and a 3D tour.
What to do if the tenant isn't complying?
According to the Florida Landlord and Tenant Act, a tenant can't "unreasonably withhold consent to the landlord to enter the dwelling unit … to exhibit the dwelling unit to prospective or actual purchasers." (Fla. Stat. § 83.53(1)). A tenant can't just refuse to allow the landlord to show the property without any reason. The landlord may have to seek legal action if this is the case.
However, landlords do not wish to take legal action in most cases, but if you want to take legal action against your tenant, you will need to contact a real estate lawyer. If you do not wish to take legal action and the tenant does not allow access for showings, it may be wise to avoid any issues and wait until the tenant's lease is up before listing the property.
Make sure the condo is in good condition
You'll need to make sure that the condo is in good condition. The property should be clean and in presentable condition at showings. Repairs should be made to satisfy your duty as a landlord and help your listing be more presentable. If the tenant is currently living in the condo, you'll need to ensure that they're not doing anything that could damage the property.
Schedule a time to inspect the property, and it may be a great idea to have a pre-listing condo inspection done. You or your agent will need to be able to take photos of the listing, so ask the tenant to ensure that the unit is cleaned and presentable for photos.
Coordinating showings with your tenant
When coordinating showings, you need to be especially careful about how you go about things. If you're listing your condo for sale with a real estate agent, they will coordinate the showings with your tenant. The tenant should receive ample notice before showings and confirm that the condo can be shown at the desired time.
Consider these things when coordinating showings with your tenant.
If possible, coordinate specific days and times for showings
Ask the tenant to show the property
Ensure that the tenant has the unit in good condition for showings.
Inspection, appraisal, and walkthrough
After you go under contract, your tenant may still need to provide access for an inspection, appraisal, and final walkthrough. In some cases, the buyer may waive an inspection or appraisal if it's a competitive market and if the buyer is paying cash for the property.
For the inspection, it will be important that the inspector can access the HVAC unit, appliances, and other places in the condo.
Your obligation to the buyer
There are two options in the Florida Realtors/Florida Bar contract to select from:
Seller shall deliver the property free of occupants
Disclose that a tenant will be occupying the property post-sale
It also states that the seller will disclose any facts and terms of the lease in writing with a copy of the lease agreement. The buyer will have the option to terminate the lease within a specific amount of days if they do not like the terms. Also, a Tenant Estoppel letter must be provided to the buyer.
What is a Tenant Estoppel?
A Tenant Estoppel is a legal document that binds a tenant to specific terms and conditions in a lease agreement. The Estoppel document is used when a property is being purchased with a tenant occupying it. By signing the tenant estoppel, the tenant agrees that they are aware of and will carry out the terms of the lease agreement, including the length of the lease, the rental amount, and any other special conditions.
If you are selling your Miami condo with a tenant in place, you will need to provide the buyer with tenant estoppel within a set amount of days before the closing date if using the FR/BAR contract.
Advanced rent and security deposits
The owner will need to be prepared to transfer any advanced rent or security deposit payments at closing. If the seller hired a property management company, the seller must communicate with the company and make their agent or closing agent aware so that the funds may be transferred to the buyer.
Assignment of lease
The seller will need to assign the lease over to the buyer, which may require the seller to seek legal assistance. The buyer will assume the seller's obligations as they will become the new landlord.
Conclusion
If you're looking to sell your Miami condo with a tenant in place, you must understand the process. By providing incentives for cooperation, communicating, and partnering with the tenant you can make the process of selling your condo with a tenant go more smoothly.