If you’ve invested in an apartment, condominium or other commercial space that you rent out to tenants, you’ve built a lucrative property that may draw plenty of offers if you ever decide to sell. Many commercial investors enjoy the monthly return on their investment these commercial properties with tenants offer, but perhaps you’re looking to sell the high-value property and take your commercial portfolio in a different direction. But can you even sell your commercial property if you have tenants, or will they need to vacate the property before you can sell? We explore how a commercial investor can sell commercial property that has a tenant in it in today’s blog.
Selling Tenant-Occupied Commercial Property In Minnesota
While it may seem complicated to sell commercial property that houses a tenant and involves a lease agreement, it’s often much more straightforward than it seems. We’ll provide some basic information in this blog, but it’s wise to review the lease agreement that your tenant signed to ensure everything you do is by the book.
Once a sale is made, the new owner is required to abide by the terms of the previously signed lease. They can’t come in and jack up rent or evict a tenant without cause simply because they are the new owners. Most new owners want to retain tenants, so while they are within their right to increase rent when the tenant is due to sign a new lease, if they push too far, they may have a hard time filling the unit. But until that lease ends, everything should stay status quo for the original tenant.
One aspect of the sale that you’ll want to keep in mind is how to handle the security deposit. You can’t just keep that now that you’re selling, so what happens to it? If the new owner isn’t taking over until the end of the current lease agreement, you will still act as the landlord and determine if the tenant gets all or some of their security deposit back based on whether or not there are damages with the property that need to be addressed. If the new owner will be taking over mid lease, the security deposit should be transferred to the new owner, who will then be responsible for returning the deposit or using it to fix tenant-caused damages.
In most instances, the new owner and the tenant want to maintain a pretty steady status quo, so the less you can rock the boat during the sale, the better it is for everyone.
For help selling a commercial asset or moving onto a new investment opportunity, reach out to the team at Commercial Partners today at (612) 337-2470.