Occupied Property, Part 2: Selling Homes with a Tenant
Tenant-occupied property confuses many Florida Realtors Legal Hotline callers. This article should help. It explains a seller’s (landlord) rights and obligations to buyers if a property is sold subject to a tenancy.
ORLANDO, Fla. – The first article in this three-part series focusing on tenant-occupied homes offered advice to help Realtors when they first take a listing. This article focuses on contract language and the required steps once respective parties arrive at an agreement.
Many Florida Realtors Legal Hotline calls focus on tenant-occupied property, and the questions usually arise from a failure to understand the parties’ obligations and rights. The information below should help.
What are a seller’s (aka landlord) obligations to a buyer if a property is sold subject to a tenancy?
For the purposes of this article, the language in the Florida Realtors/Florida Bar (FR/Bar) residential contract is analyzed. If you’re using the Florida Realtors Contract for Residential Sale and Purchase (CRSP) document, it’s addendum W. Rentals should be attached to the contract to clarify the parties’ obligations with regards to rentals.
Paragraph 6 of the FR/Bar Contract
Paragraph 6 of the FR/Bar contract addresses occupancy and possession of the property at closing. It states that the seller shall deliver occupancy and possession of the property to the buyer free of tenants, occupants and future tenancies unless paragraph 6(b) is checked.
Therefore, paragraph 6(b) should be checked if a tenant is in place or a future tenant expected.
This paragraph also clarifies that the seller will disclose the facts and terms of any third party (i.e. tenant) occupancy to the buyer in writing, along with a copy of the lease(s) or any occupancy agreement (i.e. seasonal or short-term vacation rental) within five (5) days after the effective date. If the buyer doesn’t like the terms of the occupancy, the buyer has an option to terminate the contract within five (5) days after receiving this information from the seller.
So what does this mean?
As a listing agent selling property subject to a tenancy, you should make sure the seller has access to copies of any leases at the time you take the listing to make sure this information is readily available by the time you need it.
As a buyer’s agent, keep an eye on the calendar. It helps buyers if you follow up with a request for the lease information as the contract deadline draws near.
Standard 18(D) of the FR/Bar Contract
But wait, that’s not all! In addition to the requirements under paragraph 6, the seller also has obligations under Standard 18(D) of the contract.
Standard 18(D) reveals the additional information the seller must provide to the buyer prior to and at the time of closing. This will be addressed in Part 3 of this series.
Tenant-occupied property 3-part series
- Occupied Property: Selling Homes with a Tenant
- Occupied Property, Part 2: Selling Homes with a Tenant
- Tenant-Occupied Property: The Closing Process
Meredith Caruso is Associate General Counsel for Florida Realtors
Note: Advice deemed accurate on date of publication
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