Owning a rental property is great – providing you with a great source of passive income – as long as you can maintain a high occupancy rate, that is. However, what happens if you ever decide to sell your rental property while there is an active rental lease on it…can a landlord terminate a lease?
While there isn’t one definite answer to this question, there is definitely an explanation for your scenario which will make the answer clear to your relevant situation. So, in order to know whether a landlord can terminate a lease, let’s talk about the different types of clauses that exist in your lease which you may want to consider.
Can a Landlord Terminate a Lease – The Short Answer
The short answer to the question of whether a landlord can terminate a lease or not is that it depends on your particular lease.
A rental agreement lease is a legal contract that you have signed with your tenant. Based on the clauses that were in this contract. However, if your contract doesn’t include any clauses that dictate the terms of terminating the lease, that doesn’t mean you’re out of options.
So, when can a landlord terminate a lease?
The Landlord Can Terminate a Lease If
The good news is, most standard lease agreements will include a lease termination due to sale clause – usually different conditions for the tenant and the landlord – and by default, this gives the landlord the ability to terminate the lease as long as they can give a notice to the tenant a set amount of time before they have to move out (usually between 30 to 60 days).
This amount of time is provided to the tenant so that they could find a new place to rent and to move their stuff.
So, if you’re a landlord and you’re looking to sell your rental property within the next couple of months, check your lease agreement and make sure to give your tenant enough time to move out.
The Landlord Can’t Terminate a Lease If
However, in many cases, the clause related to the termination of the lease will also include a set of circumstances under which the landlord may terminate the lease.
These circumstances will usually include things such as late payments on the rent, damage to the property, causing a disturbance, engaging in illegal activity, or other reasons.
Terminating a lease based on any of these reasons is called terminating a lease “with cause”. So, if your tenant is paying their rent on time and is taking good care of the property and being good neighbors, you can’t justify asking them to move out because you want to cash out on the property.
Additionally, even in the case, a landlord terminates a lease with cause, you must keep in mind that evictions come at a cost.
Related: How Much Does It Cost to Evict Someone?
What Happens When a Landlord Breaks a Lease?
Of course, regardless of whether you have a lease termination due to a sale clause or not, it is always a good idea to do your research and to ask your real estate agent or property manager for advice.
Each state in the U.S has its own set of rules and laws that regulate rental properties and give rights to landlords and tenants. So, make sure to check your state’s laws regarding this matter.
How Can a Landlord Break a Lease – Other Options
There are other options that a landlord can use. Some options are reactionary, while others are preemptive.
For example, a landlord may consider switching from a long-term lease to a month-to-month lease agreement. While this might reduce their occupancy rate, if they are planning to sell the property within a year or less, this option will allow them to terminate the lease without much trouble – while still giving their tenant an early notice, of course.
Another option that comes to mind when thinking can a landlord terminate a lease is the “cash for keys” option. Cash for keys is when a landlord offers their tenant an incentive to move out early – basically paying your tenant money to move out. This can be a good option if your lease doesn’t contain any clauses related to termination, but make sure to sign a “cash for keys” agreement with your tenant.
Landlord and Looking to Sell Your Rental Property?
If you’re looking for the best online marketplace that allows you to sell your rental property, or to buy other off-market properties in the U.S real estate market, then we have just the tool for you!
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Mashvisor’s platform has a wide range of tools that are designed to help you; from our Real Estate Heatmap, to our Property Finder, the Real Estate Investment Calculator, the Mashboard, and most importantly here – the Mashvisor Property Marketplace.
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Mashvisor Property Marketplace
Mashvisor’s Property Marketplace is a tool that can help property owners and landlords to post their listings online without having to go through a real estate agent or brokerage. Using this tool, you can post your rental property for sale as an off-market property, or you can buy other off-market properties if you wish to.
So, whether you’re a buyer or a seller, having access to an off-market properties marketplace means that you have access to listings and a network of buyers that are not competing over the most sought out properties on the market, but rather the hidden gems that you won’t find anywhere else.
Our listings include foreclosed homes, auctioned homes, short-sales, bank-owned homes, as well as tenant-occupied rentals. Our search tool allows you to customize your search to match your criteria, or in the case of making a listing, you will be able to provide all the details of the property in a way that allows anyone to find it. Our filters include:
- Location
- Miles (distance from a city)
- Budget
- Rental strategy (traditional vs Airbnb)
- Property type (single-family home, off-market property, multi-family home, condo/coop…etc.)
- Listing type (non-MLS, foreclosed, needs repairs, tenant-occupied)
- Bedrooms
- Bathrooms
- Desired Cash on Cash Return
- Desired Cap Rate
Related: Cap Rate Vs. Cash on Cash Return: How to Calculate Rate of Return in Real Estate Investing
Why This is Great for Landlords Wanting to Sell
This is great for landlords wanting to sell because they will be able to provide the details of their rental property, including the monthly rent that their property is currently making, allowing our tool to take full advantage of the analytics side with up-to-date rental rates.
This means that interested buyers will be able to see that your property, which is currently tenant-occupied, is generating this much monthly rent, and will pay back its price within that much amount of time. All of this will help the buyer make up his mind easier, which all leads to you closing the deal on your rental property with ease.
Related: Write Listings That Sell Your Property Fast
In the End – Can a Landlord Terminate a Lease?
Selling your rental property as a landlord can be a tough decision to make. You will be losing on your passive income, but you will also be able to make a down payment for a new bigger house that you can then turn into a rental property.
One of the most asked questions that landlords often ask is “can a landlord terminate a lease?”, and I tried my best to answer that question knowing full well that there isn’t a straightforward answer to it.
Can a landlord terminate a lease in the case he wants to sell the rental property? It comes down to your lease and whether you have a lease termination due to the sale clause or not.
Regardless of whether or not a landlord can terminate a lease, if you’re in the real estate investment business, then we can definitely help, regardless of the kind of real estate investor you are.
Start using Mashvisor today and you will see how much easier it will all become. Using our advanced platform that relies on predictive analytics and machine-learning technologies, you will find tools that will help you with all of your real estate investment needs – from finding a real estate agent to finding investment properties, calculating their projected returns, and comparing them with other properties in the market. With Mashvisor, all of your real estate investment tools can be found in one place, without a hassle!
