If you own a multi-family property in Massachusetts and are thinking of selling, one of the first things to think about is the tenancy of units in the building. You must decide whether to sell with units occupied or vacant. In some cases, one or the other can be more beneficial to your selling prospects. Here are some important considerations before selling tenant-occupied multi-family properties in MA.
Occupied or Vacant, Which is Better?
The answer to this question will vary depending on the circumstances. Sometimes, new owners will appreciate having occupied units and immediate income. In other cases, they may prefer to find their own tenants. Here are a few scenarios that could make a difference:
- Below Market Rents – If the current rents are below market, that is not very appealing to potential buyers. Vacant units would be preferable in this case.
- Owner Occupied Properties – If your type of property is ideal for owner occupants, then it’s best to deliver at least one unit vacant. This allows the new buyer to immediately move into that unit after closing.
- Long-term Tenants – Stable, long-erm tenants are appealing to potential buyers, but only if the rental rates are reasonable.
Tenant Evictions Prior to Closing
It can be difficult to complete an eviction process between offer acceptance and closing. Evictions can take a long time, especially in Massachusetts and particularly if there is no other cause for eviction (such as failure to pay or violating lease terms). It’s best to prepare for this long before selling tenant-occupied multi-family properties in MA.
Consider offering your tenants financial incentives for vacating the unit before an impending sale. Buyers purchasing occupied properties are likely to discount their offer based on the anticipated costs of eviction. If you were to perform an eviction, it could take many months and mounting legal fees. A financial incentive to tenants could end up being the least expensive option.
Any leases in place must be honored by the new owners. The terms of your lease will impact the marketability of your property as you attempt to sell. Evicting tenants who have paid rent and have not violated lease terms is not easy. If you anticipate that the leased units will be viewed negatively by potential buyers, you can certainly try offering incentives to the tenants to break the lease. As long as both you and the tenants are in agreement, leases can be terminated at any time. It’s when one party doesn’t agree that it becomes complicated.
Legal Assistance with Tenant Matters
Tenant occupancy and eviction matters can get complicated. You may need assistance with writing up tenancy termination documents or property sale agreements including conditions specific to tenant-occupied units. At Martino Law Group, we specialize in Massachusetts real estate law and are ready to assist you. Contact us today to get started.