How To Sell a House with Family as Tenants

(March 11, 2015)

Help!  My Family is Living in My Home Rent-Free

Believe it or not, I get calls about problems with family as tenants weekly.  

It's not because it's typical, it's because it involves family and is therefore much more difficult. Keys sold Protecting and helping  members of our family is something that we all try to do to the best of our abilities.  The hardest part of helping family is when it involves a living situation, especially a situation where family is living in a house that you own.  

In the beginning, renting to family seems like a great idea.  It helps your cousin, nephew, aunt, or even close friends, for that matter.  And, you have people you know renting from you.  Because you trust them so much, you even charge low rent.  Sound familiar?

Well, over the years, market rent has been going up.  But, because your renters are family, you don't raise rent.  After all, you are in a healthy financial situation personally and it's helping them out.  Now, you are wondering how to sell a house without ruining your family or your financial health.

Family and Business Don't Mix

At some point, the perfect arrangement changes.  Either the renters can't pay their already low rent and turn to you, their family, to help them out.  You let it go for awhile, but it begins to have an impact on you financially.  Something breaks at the house, and it's a big expense.  The rental income that would have been helpful isn't there.  The renters don't want to start paying rent again because the house is in disrepair.  And so the downward spiral begins and you really want to know how to sell a house with family as tenants.

How Do I Legally Ask Them to Move and Keep the Family Intact?

There become limited solutions to this problem when there is a communication breakdown, which is common in the scenario described above.  Hopefully, it's not this bad, but, it can still be hard to reach an agreement with family members who are living in your house.

How to Sell a House with Family as Tenants

  • Review the rental agreement-If you have a rental agreement, great.  Renters who have been renting for over 1 year are entitled to a 60-day notice to vacate in California.  If they are late on rent, then you can serve a 3-day notice and hire an eviction attorney.
  • No rental agreement?  This gets trickier, but is very common in family situations.  Tenants in California have lots and lots of rights.  The eviction process is difficult with a rental agreement, and even more difficult without one.  It's best to try to reach an agreement, that is written, signed and dated by all people living at the house, with a move-out date and stipulations.  Will it hold up in court?  It could be tough, but hopefully it won't get to that point.
  • Is there another member of the family who would like to buy the property?  This is always a great solution, especially if the buyer is willing to work with the family members/tenants.
  • You may have to offer cash for keys.  Yes, I know, there is no way you are going to pay your family members money to move when they have taken advantage of the situation for months if not years.  Well, if cash will get them to move, then bite the bullet.  Otherwise, you may just have to keep enduring the same problem.
  • Lastly, you can sell the house "AS-IS", including keeping the tenants in place.  It's what I specialize in I specialize in, creating simple solutions to complex problems.

What Do I Do Next?these-keys

Really go through the steps of talking to the family who are living in your house, seeing if one of the family members will buy the house, and if none of that works, you must go through the legal process of eviction.  Otherwise, this problem will definitely not go away.  

inherited house


Topics: landlord issues

Jennifer Shenbaum

Written by Jennifer Shenbaum

Jennifer Shenbaum is a real estate investor based in Southern California. She is a veteran of the housing market crash of 2007. Best of all, she offers free remodeling ideas to all who ask.

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