Selling a rental home with a tenant inside

The State Law Library, quoting the Texas Tenant Advisor, says the new owner has to honor the lease and other agreements made with the original owner, unless the lease specifically says it terminates on a sale. Read your lease for a sale clause before you list.

The State Law Library says there are no Texas statutes that regulate a landlord's entry; the lease controls, and it may or may not require advance notice. If the lease does not allow entry, the landlord may not have the right to enter without permission, apart from possible emergency or repair exceptions. Courts treat quiet enjoyment as an implied term of every lease.

Texas Property Code 92.105 says that when ownership ends by sale, the new owner is liable for returning security deposits from the date title is acquired, and must give the tenant a signed statement acknowledging responsibility and stating the exact amount. The seller remains liable until the new owner has received the deposit or assumed the liability, unless a written contract says otherwise.

If leases are assigned, TREC form 51-1 requires the seller to transfer security deposits to the buyer at closing and the buyer to give the tenant the signed statement. The seller also states whether each lease is in force, whether any tenant is in default or has prepaid rent, and whether there are disputes. Rent is prorated through the closing date under the TREC resale contract.

Both the TREC resale contract and form 51-1 say that after the contract is signed, the seller may not create a new lease or amend an existing one without the buyer's written consent.

Look for the entry clause, any notice period, whether the lease allows signs or a lockbox, and whether it says anything about a sale. Those terms set what you can ask of the tenant.

Tell the tenant your plans directly, before a sign goes up. Explain how showings will work and how long the process might take. A cooperative tenant is the biggest single factor in how a tenant-occupied home shows.

Offer fixed windows, such as two weekday evenings and a weekend block, with advance notice that meets or exceeds the lease. Some owners offer a rent credit or a cleaning service in exchange for keeping the home show-ready; put any such agreement in writing.

Ask permission before photographing personal items, and remove or blur anything identifying. Consider shooting while the tenant is out and after a professional cleaning you pay for.

If you are marketing to owner-occupants, plan around the lease end date or a written, voluntary early move-out agreement. If you are marketing to investors, prepare a rent roll, the lease, the deposit amount, and recent repair records.