Selling with tenants in place

Selling a rental property with tenants in place in Pennsylvania — the honest guide

Name: ABE Homes
Telephone: (484) 895-1352
Price range: $$

The most common question we hear from burned-out landlords or heirs of rental properties: "Can I sell if the tenants are still living there?" The short answer is yes — but the rules under Pennsylvania's Landlord-Tenant Act of 1951 determine how it works. The way most cash buyers handle this ("we'll evict for you") is misleading and often illegal. Here's the actual process.

The lease transfers with the property — period

Under the PA Landlord-Tenant Act (68 P.S. § 250.101 et seq.), when a property with tenants in place is sold, the existing lease transfers automatically to the new owner. This means: (a) if the tenant has a year-long lease in force, the new owner is bound to honor that lease until it expires, (b) the new owner inherits all terms — rent, security deposit, pet rights, everything, (c) the new owner cannot "break" the lease just because the property changed hands. The tenant also cannot break the lease based on the ownership change alone. If the tenant is month-to-month (no fixed lease), rules differ — see the next section.

PA eviction notice timelines (no-lease vs lease)

To terminate a month-to-month tenancy in PA: the landlord must give at least 15 days' notice if the tenancy has been under a year, or 30 days if it's been over a year (68 P.S. § 250.501). Once notice is given, if the tenant doesn't leave, the landlord must file a landlord-tenant action with the local district magistrate — that takes 30-60 days more. After judgment, there's a 10-21 day window for appeal. If no appeal, an order for possession is issued. Total: 60-120 days from notice to vacant possession, best case. For fixed-term leases: the landlord can only evict for specific lease violation (non-payment of rent, damage, illegal activity) — not for "I want to sell the property."

Security deposit transfer — the overlooked trap

Under 68 P.S. § 250.512, security deposits must transfer to the new owner at closing — the selling landlord CANNOT just keep the deposit. If the deposit is held in an escrow account or interest-bearing bank account (required if the deposit exceeds $100 and has been held more than 2 years), the interest also must transfer. The new owner must notify the tenant in writing within 30 days after closing about the ownership change and where the security deposit is now held. Fail to do this properly and the selling landlord can face legal claims from the tenant, EVEN AFTER the sale closes. A competent title company handles this transfer explicitly at closing — ask about it directly.

Why traditional (mortgage) buyers usually pass

Mortgage underwriters for owner-occupied buyers (most of the buyer market) require the property to be vacant at closing OR the tenant to vacate within 60 days post-closing. This shrinks your buyer pool to: (a) investors with investment-property financing (more expensive, stricter terms), (b) cash buyers. Listing traditionally with an agent is usually slow here — the typical agent isn't equipped for hostile or evasive tenants, and showings are difficult to schedule. Most landlords who've dealt with problem tenants for years don't want to also deal with showings for months.

How we close with tenants in place — the honest process

Mike walks the property ONCE — with proper notice to the tenant (24 hours minimum under 68 P.S. § 250.501.2) and respect for their privacy. After the walkthrough: (1) Mike makes the offer based on actual condition plus existing-lease cost (if rent is market, no discount; if it's below market, moderate discount), (2) if the tenant has a fixed lease, we assume the lease — the tenant stays, keeps paying, we take over as landlord, (3) if the tenant is month-to-month and the selling landlord prefers vacant, we can handle the transition — but honestly, with proper notice and no pressure, not in some "cash-for-keys eviction" scheme that violates tenant laws. (4) We close. Security deposit transfers with proper documentation. The selling landlord exits the landlord business. What we DON'T do: promise "we'll get the tenants out" before closing — that's legally messy and dishonest. If the lease exists, we assume it.

Related resources

Written by

Mike Sup

InterNACHI Certified Professional Inspector · #21032009 · speaks English & Spanish

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