Published by Kelly Sells Boston · About Kelly Cui
Key points
- Find out first whether the tenant has a lease with an end date or a tenancy at will. That answer, together with anything the tenant agrees to in writing, decides whether you can promise the buyer an empty home.
- A notice does not remove anyone. If a tenant does not leave, only a court can order it; changing locks, cutting utilities or letting needed repairs slide are not lawful ways to empty a home.
- Every showing, inspection or appraisal visit is an entry into the tenant's home and has to be arranged with the tenant in advance. Read the lease's entry clause instead of assuming a standard number of hours.
- The security deposit, its interest and any prepaid last month's rent belong to the tenant's side of the ledger, not to your sale proceeds. They pass to the buyer, and the tenant must be told in writing.
- Give the buyer's attorney a complete tenancy file well before closing: lease, rent ledger, deposit and bank receipts, interest records and the statement of condition.
Start with the tenancy you actually have
Massachusetts has two main kinds of residential tenancy. Under a lease, the landlord and tenant agree on a fixed term, often a year. During that term the rent stays the same, and the landlord can end the tenancy only if the tenant fails to meet the lease's conditions. A tenancy at will has no end date. When rent is paid monthly, either side can end it by giving notice 30 days or one month before the next rent due date, whichever is longer.
Pull out the signed lease, any renewals or addenda, and anything in writing about a tenancy at will. Note the end date, the rent, what the tenant pays besides rent, and any clause about entry, renewal or a sale of the property. Have your attorney read these papers before you list, because they decide what you can promise a buyer.
If you sell with the tenant staying, the buyer becomes the tenant's landlord and takes over the obligations that go with it, including the deposit. If the buyer needs the home empty, the tenant has to actually be gone by closing: because the lease term has ended, because a valid notice has ended a tenancy at will, or because the tenant has agreed in writing to leave early. Payment or other terms offered for an early move are a negotiation, and the agreement should be in writing and reviewed by your attorney.
Decide what the contract will promise
Purchase and sale agreements typically address possession at closing, including whether the home is delivered free of tenants, and they adjust rents between seller and buyer as of the closing date. Settle with your attorney which way your sale will go before you accept an offer. Promising vacant delivery when the tenant has not agreed to leave risks signing for something you cannot deliver.
If the tenant stays, the buyer will want to know the rent, the term, the deposit and anything paid in advance before signing. The agreement may also give the buyer periodic access to the home before closing. Each of those visits is another entry into the tenant's home and needs the same advance arrangement as a showing.
Showings and access
A tenant has the right to occupy the home, and the landlord may enter only in limited circumstances. State law lets a lease allow the landlord to enter to inspect, to make repairs, or to show the home to a prospective tenant, purchaser or lender, or their agents. The Attorney General's guidance says the landlord must arrange these entries with the tenant in advance. Entry without the tenant's approval is limited to situations such as a repair emergency that could damage the building, or a unit that appears to have been abandoned.
Read the entry clause in the lease, and do not assume a standard number of hours applies. Cooperation usually comes from predictability: tell the tenant early that the home is going on the market, propose a few fixed showing windows, confirm each visit ahead of time, and keep open houses to a reasonable schedule. A tenant who knows the plan is more likely to have the home ready, which also helps the sale.
No pressure tactics, and repairs continue
The landlord must keep the home safe and in compliance with the State Sanitary Code throughout the tenancy, and a pending sale does not change that. Repairs the tenant reports still need to be made. A landlord cannot force a tenant out by changing the locks, removing the tenant's belongings, shutting off heat or electricity, or holding back necessary repairs. Removing a tenant without the tenant's agreement takes a court case, which starts with a proper notice.
Timing matters too. If a tenant has reported conditions to the landlord or to the board of health, certain landlord actions within the following six months, such as ending or not renewing the tenancy or raising the rent, can be presumed to be retaliation. Talk to your attorney before sending any notice in that situation.
The deposit, last month's rent and interest
A security deposit remains the tenant's property. It must be held in a separate, interest-bearing account at a bank in Massachusetts, kept apart from the landlord's own money, and it is not part of what you net from the sale. The deposit and any last month's rent paid in advance both earn interest for the tenant, at 5 percent a year or the lower rate the bank actually paid.
When you sell, the law requires you to transfer the deposit with its accrued interest to the buyer, and to credit the buyer with any prepaid last month's rent and its interest. The buyer must then notify the tenant in writing, within 45 days of the transfer, that the buyer now holds the deposit, giving the owner's name, business address and business telephone number, and those of any agent. You remain responsible for the deposit until it has been transferred and the tenant has been notified in writing, or until it has been returned to the tenant.
The buyer has good reason to check all of this. If a seller fails to hand the deposit over, the law makes the new owner answerable to the tenant for it anyway. Expect the buyer's attorney to ask for the bank receipt, the deposit receipt and the interest history. How the money moves at closing is for the two attorneys to arrange, and a handover sheet between seller and buyer does not replace the written notice the law requires.
The tenancy file for the buyer
Collect these before you list, not in the week of closing. Problems found late, such as a deposit that was never placed in a separate account, are harder to fix under a deadline. A landlord who accepts a deposit is also required to keep records of it, including receipts and statements of condition, for two years after the tenancy ends. Taxes on selling a rented home are covered in the guide to seller taxes.
- The signed lease with all renewals, extensions and addenda, or the written terms of a tenancy at will
- A rent ledger: payments received, the current balance, and any last month's rent paid in advance
- The deposit receipt and the bank receipt showing the bank's name and location, the account number and the amount
- Records of interest paid to the tenant or credited against rent each year
- The statement of condition given at the start of the tenancy, and any list of damage the tenant returned
- For homes built before 1978, the signed Tenant Lead Law Notification and Tenant Certification, and any lead inspection, risk assessment, Letter of Interim Control or Letter of Compliance
- Open repair requests, and the tenant's contact details, shared with the tenant's knowledge
This guide covers the practical side of selling with a tenant in place. Whether and how a tenancy can end before closing, and the exact notices and transfers your sale requires, depend on your lease and on the law; your attorney handles those details.