Being a landlord in California is not easy, especially when you have to sell your investment property for various reasons but find that the lease with your tenants has not yet expired. In such situations, there are more matters to handle, and the pressure can be greater. Faced with this scenario, I am often asked two questions by clients, which may be two common misconceptions. Mishandling these situations can potentially lead to unnecessary trouble or even lawsuits. Therefore, be sure to bookmark for easy reference in the future when needed.

The first question is: "If the buyer doesn't need to see the property, can I just transfer ownership directly to the buyer without informing the tenant?" ”

The second question is: "Once I have transferred ownership to the buyer, the property owner has changed. Does the original contract I signed with the tenant become void? Can the new owner evict the tenant directly?"

Both of these questions are a big "No." If a property owner wants to sell the property and the lease agreement is still in effect, it is absolutely necessary to notify the tenant, and this must be done in writing, typically with a notice period of 120 days, 60 days, or 30 days. The specific notice period required depends on the type of lease agreement you have with the tenant. If you have a fixed-term lease agreement with the tenant, you must provide a written notice 120 days in advance. If you have a month-to-month lease agreement with the tenant, you must provide a written notice 30 days or 60 days in advance. The specific notice period of 30 days or 60 days depends on whether the tenant has lived in the property for a full year. If the tenant has lived for less than a year, it's a 30-day notice; if it's been a year or more, it's a 60-day notice.

If the property ownership changes through transfer, the original landlord must provide written notice to the tenant within 15 days. This notice should include details such as the date of the ownership change, the name, address, and contact information of the new landlord, as well as information regarding the handling of the security deposit. The new landlord cannot evict the tenant simply because they have recently purchased the property; such action would be illegal. However, if the tenant defaults on rent, violates lease terms, engages in illegal activities, or similar circumstances occur, then eviction proceedings may be initiated.

Now that we've cleared up these two misconceptions, you might wonder when would be the best time to list the property for sale. Should you wait until after the tenant has vacated before listing it for sale? Or should you list it for sale while the tenant is still occupying the property? Both of these options have their own advantages and disadvantages.

In the first scenario, after the tenant has vacated, you can conduct a thorough cleaning, make any necessary repairs or renovations, and utilize popular staging techniques to make the property look its best before listing it for sale. This can attract more potential buyers' attention. However, the downside is that the property will be vacant, resulting in a loss of rental income.

In the second scenario, listing the property for sale while the tenant is still occupying it can save you the expense of renovations or staging. Additionally, you won't lose rental income since the property remains occupied. Furthermore, having a tenant in place might attract buyers interested in purchasing investment properties. However, the downside is that showing the property to potential buyers will require coordination with the tenant, which may not always be convenient or flexible.

After understanding the advantages and disadvantages of both scenarios, you can consider your time constraints, budget, and consult with a real estate agent to assess the current market conditions. By considering all factors, you can choose the option that best suits your needs.