Can you sell a rented home?

The real estate market takes off little by little, and with it, increases the number of transactions and the situations that these exchanges pose. And, for example, a home can be for sale while it is inhabited by a tenant. This scenario is more frequent than it seems – it occurs in 36% of homes for sale and raises questions such as: Is it possible to sell a rented house? Is it necessary to compensate the tenant in case of sale? What does it say? the law on this matter ?. In today’s article we will try to elucidate this issue that raises different legal scenarios.

Why does the owner decide to put the property for sale?

Many owners turn to the real estate market as a resource to invest and thus generate profits. Well, it may happen that the owner needs to sell the house because it is a suitable time for it. Also, the owner may need liquidity in the face of some economic need or even need the house again for personal use.

What does the regulation say?

In this regard, it is the LAU (Urban Leasing Law) that regulates this scenario and grants each party rights and obligations. These transactions are contemplated in articles 14 and 15 of the Law of Urban Leases, and it defines that this transaction is possible and completely legal.

So; Does the law allow you to sell? The answer depends on whether the contract is registered in the Land Registry or the purpose for which the home is needed. We explain the differences below.

Case 1 / The contract is registered in the Property Registry
In this case, the owner has the right to sell the home. Although the Law of Urban Leases indicates that the tenant has preference and can remain until the end of the contract, the ownership of the contract can be transferred to the new owner.

Is it necessary to compensate the tenant? On this occasion, it is completely legal to sell as long as you need it for him or his family and notify the tenant two months in advance. The Urban Leasing Law is clear: the landlord must respect the 5 years in which the tenant cannot be evicted. This Law admits an exception and is that the owner needs the apartment for him or his family, so there will be no need to compensate the tenant.

Case 2 / The contract is not registered in the Property Registry
The LAU refers to the regulation of article 1571 of the Civil Code that establishes in its first paragraph that “the buyer of a leased property has the right to terminate the lease in force when the sale is verified, unless otherwise agreed and as provided by Law Mortgage. ”

In this case, the landlord is fully entitled to sell the apartment, as long as the tenant has renounced the preferential acquisition in the contract. Let’s see the assumptions raised by the signing or not of this clause.

NO clause of resignation exists: the owner has free way to sell. To do this, you must notify the tenant 30 days in advance. It is the time limit that the tenant has by law to leave the house.

YES there is a waiver clause: If the landlord has sold the property to a third party and has not communicated it to the tenant, he may exercise his right to withdraw. What does this mean? The tenant can buy the apartment at the same price that has been sold and has 30 days to do so.

The three parts: landlord, tenant and buyer
The duties, rights and obligations of the three parties are different, let’s see:

With regard to the owner, remember that the tenant has the right of preferential acquisition, unless expressly waived. That is why the owner must make a communication to the tenant to offer the purchase of the property with all conditions. In addition, after the purchase of the house, you must offer the house back to the tenant to exercise his right to withdraw.

• Tenant In case of preferential acquisition, Article 25 of the LAU defines that this right is divided into two rights, the right of first refusal and the right of withdrawal.
• Aspects of the right of first refusal: before selling the house, it must be offered to the tenant. There must be a reliable notification of the sale to the lessee that includes prices and conditions of the sale. And the term is 30 calendar days.
• Aspects of the right of withdrawal: the tenant can acquire the house once the sale is made. It may be exercised when the reliable notification concerning the sale is incomplete or has not been made. The term is 30 days.
  What affects the buyer. You should know that the house is rented, therefore, the owner is obliged to inform you. In addition, it is advisable that the buyer before finalizing the transaction, verify that there are no charges on the house.

Possible agreements between the parties

To avoid problematic situations, it is best to reach an agreement.

Tenant and buyer agreement: It is a usual situation, especially in buyers-investors. The agreement is that the tenant remains in the house until the end of the contract. Thus, both parties win.
Lord and tenant agreement: The landlord must consider the tenant and communicate all his intentions. It is best to keep the communication path open and clear with the tenant to avoid any setbacks. The tenant’s collaboration is key, since he will have to agree for potential buyers to visit the apartment.