Notifying Tenants of Lease Non-Renewal

[Amethyst]

We hate being landlords, and would like to sell our rental townhouse. The lease is up on Oct. 31st, 2013.

The lease states that either party can give notice to the other 90 days before the lease is up, so I'm preparing a letter to the tenants which they should receive tomorrow.

Unfortunately the timing is terrible, since by the time we get the unit ready for sale it will be The Holidays, and then Snow Season, when hardly anybody looks at houses. So we would like to offer them the opportunity to stay until early 2014, in the very modest hope they'll take us up on it (the carrot is that their rent is only 85% of current market rates).

What do you think of this wording: (I don't think it's their business why we choose not to renew, do you?)


Dear Mr. and Mrs. Tenant:

This letter is to inform you that we have chosen not to renew the lease on Dwelling, which expires on October 31, 2013. If agreeable to you, we would be happy to extend the lease month-to-month until February 28, 2014.
We have enjoyed having you as tenants and wish you the very best.

Sincerely,

Mr. and Mrs. Amethyst

[Jack_Pine]

I would spell out you are offering them a 4 month lease extension at the reduced rate (specify rate). I thinks it is a win-win.

[Dawg52]

I would state we plan to sell the unit. Who knows, they might be interested in buying the townhouse.

[farmerEd]

You may want to even play up the 'in order to help you out we can give you a 4 month extension...' to make it seem like you are doing them a favor. Its what you want anyway, but might make it seem like you a making a conciliatory gesture to give them time to find a new space. Not sure if it matters in your state, but in some states its hard to get rid of tenants that don't want to leave, so playing up that angle may make you seem like a nice landlord, for whatever its worth.

[Gatordoc50]

From experience, most renters balk at 30 days notice. They will state that 30 days is not enough time to find a suitable place, especially if they are paying below market rates. Like those other replies, I would offer to extend with a definitive end. You could also raise the rent to above market rates due to increases in taxes, insurance, etc. and most likely they will not renew.

[Major Tom]

I don't think it would hurt to tell them that you plan to sell the property. If you don't state a reason, they may think it has something to do with them, or may suspect some other reason (such as you wanting them out so you can rent it out to someone else for more). If they know the reason you are ending the lease, I think it keeps everything above board and increases the chance that they will leave the property in a timely fashion with the minimum of trouble, and in good condition.

I can't say I blame you for not wanting to be landlords any more. I know it works for many people, but my brief experience of owning rentals convinced me that it wasn't quite my cup of tea either.

[rgarling]

Quote:

Originally Posted by Amethyst ... Dear Mr. and Mrs. Tenant: This letter is to inform you that we have chosen not to renew the lease on Dwelling, which expires on October 31, 2013. If agreeable to you, we would be happy to extend the lease month-to-month until February 28, 2014. We have enjoyed having you as tenants and wish you the very best. Sincerely, Mr. and Mrs. Amethyst

Assuming you have good tenants, I would include your intent to sell, something like:

Dear Mr. and Mrs. Tenant:

This letter is to inform you that we have decided to sell the home you are leasing, which will affect your opportunity to renew the lease. The current lease expires on October 31, 2013. If agreeable to you, we would be happy to extend it until February 28, 2014. At that time, we intend to advertise the property for sale. After February, 28th 2014 you may continue month to month until the home is sold; however, you will need to allow realtors to show the home to prospective buyers.

We have enjoyed having you as tenants and wish you the very best, whatever you decide.

Sincerely,

Mr. and Mrs. Amethyst

[Jack_Pine]

Quote:

Originally Posted by rgarling Assuming you have good tenants, I would include your intent to sell, something like: Dear Mr. and Mrs. Tenant: This letter is to inform you that we have decided to sell the home you are leasing, which will affect your opportunity to renew the lease. The current lease expires on October 31, 2013. If agreeable to you, we would be happy to extend it until February 28, 2014. At that time, we intend to advertise the property for sale. After February, 28th 2014 you may continue month to month until the home is sold; however, you will need to allow realtors to show the home to prospective buyers. We have enjoyed having you as tenants and wish you the very best, whatever you decide. Sincerely, Mr. and Mrs. Amethyst

I thought the OP implied that there was some work to do on the place before it could be sold?

[aaronc879]

Every lease i've ever heard of goes month-to-month after the first year anyway. I think the way you worded it is fine but I don't see any reason not to let them know you plan to sell. Best of luck.

[lhamo]

Why not just inform them that you will be switching to a month-to-month rental agreement rather than a long-term lease as of the end of the current lease. Up to you whether or not you want to indicate that you plan to sell (though they might be interested in buying).

I don't see why you should indicate an end date to the new agreement if it is month-to-month. Not specifying an end date gives you flexibility if you decide to put off (or accelerate) the sale for some reason.

[LoneAspen]

If it were me, I would definitely let them know I was planning on selling the property. If not in the lease cancellation notice, at least verbally. They might want to try buying the place, and you might not have to deal with holding off looking for buyers until after the holidays, and you might not have to deal with as much fix-up work.

I've known tenants that bought the place they were renting when the owner decided to sell. You never know. I'd definitely let them know.

[landover]

A hint at a sale price may help, my last landlord offered me a very good deal, unfortunately I was planning to move to a different place. I roughly estimated that it was approximately sum of commission, preparation plus little more. He was motivated since he was 6-7 hour drive from the place.

[Fishingmn]

I'm a Realtor and own 9 rental properties.

Personally, I'd have them move out in October and list it as fast as you can in November.

Living in Minnesota I realize sales are slower in December and January but the number of listings is way down too so you really are going up against less competition. People buy homes all year round - the peak summer sales is about 30% higher than the dead of winter but there isn't a corresponding lower sales price during the winter.

I'm not sure of your market but with the huge run up in prices we've seen in the past 12 months and the threat of higher interest rates I think there's just as much a possibility that prices come down a bit actually in the near future (but I don't have a crystal ball). Therefore, instead of taking a below market rental rate I'd just move forward sooner than later.

Also, you could certainly offer it to them for sale but by not exposing it to the vast market you could risk not getting full price. Now you could certainly save on Realtor commissions to compensate but the nice thing about a seller's market like we have now is that you often get multiple offers which will give you the true highest and best value.

Good luck!

[Amethyst]

We used a tenant finding service, and would owe that service a commission if they did buy. So we're going to get a real estate agent.

Thanks for everyone's advice. Fishingmn makes a good point. If the tenants choose not to stay, we will put the unit up for sale as soon as we've fixed it up. It will of course need new flooring, paint, and no doubt other work. Tenants are very hard on property. There is no question of showing the unit occupied - these tenants have crammed so many belongings into the place you can hardly see the floor.

Amethyst

[daylatedollarshort]

Quote:

Originally Posted by Fishingmn I'm a Realtor and own 9 rental properties. Personally, I'd have them move out in October and list it as fast as you can in November. Living in Minnesota I realize sales are slower in December and January but the number of listings is way down too so you really are going up against less competition. People buy homes all year round - the peak summer sales is about 30% higher than the dead of winter but there isn't a corresponding lower sales price during the winter. I'm not sure of your market but with the huge run up in prices we've seen in the past 12 months and the threat of higher interest rates I think there's just as much a possibility that prices come down a bit actually in the near future (but I don't have a crystal ball). Therefore, instead of taking a below market rental rate I'd just move forward sooner than later.

We are planning on buying a new house and then selling ours afterwards. We were wondering when to do the buying and selling. That is all good advice. Thanks.

[Meadbh]

Quote:

Originally Posted by Fishingmn Living in Minnesota I realize sales are slower in December and January but the number of listings is way down too so you really are going up against less competition. People buy homes all year round - the peak summer sales is about 30% higher than the dead of winter but there isn't a corresponding lower sales price during the winter. Good luck!

This fits with my personal experience. When I was selling my last house (in an area with very cold winters) I delayed the process by a month to accommodate my employers. Even for my own residence, I needed time to paint and repair. By the time I was ready to put the house on the market, so was everybody else, and I lost my competitive advantage. Instead of multiple offers I had to reduce my expectations and sold for just under asking price. There were eager buyers out there all winter and they were bidding prices up for the houses that were on the market in January.