Due to necessity or investment choices, a home or business owner may find himself in the situation of having to sell.
But how should you proceed if your property is leased? And what are the exact dynamics of the sale?
In this guide we will focus mainly on the sale of a rented property that has the tenant inside, also providing some information regarding the commercial lease and how the developers of Mivida City Islamabad have found a way out through this tricky process.
Leased property sale what it is
A leased property is an asset governed by a lease.
We clarify from the outset that a leased property (meaning) means a property governed by a lease or rental agreement in place.
Sale of property leased before the deadline
The owner, called lessor, undertakes to grant the use of the real estate to a user, the tenant or tenant, establishing a periodic time and rent.
The term “sale of a leased property” therefore indicates the owner’s right to sell an asset even with tenants regularly inside.
This is allowed both for the sale of leased property for commercial use and for residential use.
Having clarified the concept, let’s see how we proceed.
The law considers the sale of leased properties as the assignment of the lease to the buyer by the seller.
The agreement between landlord and tenant is not canceled, but remains valid until it expires.
Because the sale of a rented house requires the lease to be sold
According to the law, therefore, the buyer will take the place of the seller of the leased property, and as a new landlord he will undertake to honor the agreements with the tenant.
All this even without the consent of the latter.
But why?
According to the art. 1406 of the Civil Code, to transfer a contract with corresponding services requires the consent of both parties.
Why then does it not apply to the sale of a leased property?
With this derogation, the contract is more simply sold to streamline the transfer of ownership of the properties.
The tenant, who has already leased the property from the previous owner, does not require, according to the law, any added protection in the sale of the premises he enjoys.
That said, a tenant is not completely excluded from the dynamics of the sale of a leased property.
The lessee must be promptly informed
In fact, first of all, the lessee must be informed of the sale.
Secondly, in cases where it is lawful, the tenant may exercise the pre-emption right to purchase on the sale of the leased property.
What is the right of first refusal and how it works?
But in the event of a sale of a property leased before the deadline, what happens?
If the lessor intends to sell before the expiration of a contract, art. 38 of law 392/78 assigns the tenant the right of first refusal for the purchase of the property.
What does the right of first refusal mean?
In other words, if the owner wants to sell a leased property, the tenant takes precedence to buy it on a third party.
How should the landlord behave with the tenant?
When you want to sell a rented apartment it is essential to be well informed and not to make some major mistakes.
The landlord must communicate his need and decision to sell the house to the tenant by means of an official document.
The information must therefore be precise, transparent and timely.
What are the deadlines that the tenant must respect?
Once the tenant has received the communication, he must comply with precise deadlines.
Specifically, the tenant has 60 days from the communication to evaluate the purchase.
And if the tenant is not interested in buying, the house can be sold freely.
In fact, clauses proving the tenant of his right of precedence cannot be included in the lease contract.
The limits of the right of first refusal
This preference enjoyed by the tenant, however, has limits.
In fact, it is valid only if the lease has not expired or is at the first expiry, for example at the renewal of a 4 + 4 free rent.
Furthermore, if the tenant owns other residential properties in addition to the one for sale, also in this case he will not be able to exercise the right of sale on the leased property.
When the landlord loses the right to be the preferred
In addition to the pre-emption limits just mentioned, there are cases in which the tenant does not have the right to be preferred.
For example, when the landlord transfers the property to his spouse, to relatives up to the second degree or to a co-heir.
No pre-emption of sale on the leased property, not even on involuntary transfers, transfer of the property to a company or in the case of a block sale of an entire building.
Mistakes that the landlord must absolutely avoid
A mistake that you absolutely must not commit is that of fueling conflicts and differences with the tenant of your property.
Also consider that if you want to sell the furnished house, a conflicting relationship with the tenant could lead the latter to damage furniture and therefore make the sale of your home more complex and difficult.
We at Likecasa therefore recommend that you communicate your decision to the tenant and show that you are very helpful towards him by asking for the same availability in return.
What is the market value of a leased property?
Yes, how much can a landlord earn when he sells a property already in the hands of a tenant?
From the sale of a leased property, the owner collects a smaller sum than the real value of the property.
This is a real “rental property depreciation “.
We explain better!
This decline occurs for two reasons.
- On the one hand, it is the cause of the complete and immediate unavailability of the premises.
- On the other hand, because, with the same free property and a rented property, the market demand for unoccupied buildings is greater.
On average, the depreciation of a home or business already occupied is around 15-20%.
The answer (of course) has no universal validity.
To know the market value of the leased property, the careful expertise of an expert is required.
Variables such as the type of contract, the rent paid by the tenant or the time left at the end of the lease must be considered.
To give an example, in the case of seasonal leasing or for short periods, the value of a sale of a leased property can drop by only 5%.
In the case of complex situations, such as the onset of arrears or eviction procedures, the sale price can instead fall by up to 30%.
In this case it is very useful to request a free evaluation of your property. The web proves to be a great resource that offers many and different platforms that provide free real estate appraisers.
How to proceed if the tenants don’t leave
In addition to weighing on the value of the home, the relationship with the tenants already settled is a substantial aspect in a leased property sale.
In fact, it may happen that at the expiry of the contract the tenants do not leave the house, resulting in tensions or legal issues. How should the new owner proceed then?
In this case, the landlord has the right to undertake an eviction procedure for termination of the lease.
The law (art. 657 et seq. Of the Civil Code) indicates two preliminary solutions: the injunction or the summons to trial. In the first case the owner urges the tenant to respect the agreements, in the second he sets a hearing to express his reasons in court.
The ball then passes to the tenant.
If it is established and unfounded reasons are presented at the hearing, the judge releases the executive eviction with immediate effect.
If, on the other hand, the tenant does not appear at the hearing or does not object, the order takes effect after thirty days.
A third and more complicated scenario arises when the judge recognizes the tenant’s serious reasons that prevent eviction.
The new owner then has to wait or come to an agreement with the tenant.
Is it easy to sell a house with a tenant inside?
Many wonder if it is worthwhile and if it is a feasible operation.
It is not easy and there are risks that need to be considered, but in any case it is a feasible operation.
As you will imagine, the greatest difficulty lies in the fact that the buyer must be reassured and reassured that the tenant will leave the house when the contract expires.
This uncertainty could of course make sales times longer or make sales difficult.
Furthermore, you must still consider that there could be a situation in which the buyer is willing to buy only by significantly decreasing the sale price.
Is it worth selling a house with a tenant inside?
It is worthwhile to sell a rented house if your buyer wants to make a real estate investment and has no intention of going to live there.
In this case the operation will be interesting both for you who sell and for him who buys.
As you can see, a seemingly difficult real estate operation does not necessarily turn out to be convenient.
How the sale of a leased commercial property works?
Let’s see how a leased property sale for commercial use works. As with a home, the sale of a business also involves the transfer of the contract to the new owner.
The tenant by law is also entitled to pre-emption in this case. In fact, if he is willing to buy at the same price and third party conditions, then the owner must first propose the sale of the commercial property leased to the tenant.
The pre-emption, even in this case, has limits: it is given only when the property is used for industrial, craft or commercial activities that involve contact with the public.
However, it is not granted in the event of a commercial property sale to a spouse, relatives or co-heirs, or in other circumstances established by jurisprudence.
The guide to selling a house
Selling a house is a delicate operation that requires a lot of attention.
In some cases, it becomes a very long operation caused not only by the trend of the real estate market, but also by inexperience.
For this reason, we at SKY Marketing have created a FREE GUIDE that will allow you to evaluate and not forget important factors and to be able to implement necessary and very useful strategies.
