Can I sell a house with a tenant in it?
Yes. The Virginia Residential Landlord and Tenant Act attaches three duties to a sale of rented premises: notify the tenant and give the purchaser's name, address and a telephone number; enter for showings at reasonable times, generally on notice; and transfer the security deposit and accrued interest to the new owner at the transfer. Whether the lease binds the buyer is a question for the lease and an attorney.
A rented house changes hands under the Residential Landlord and Tenant Act
A house can be sold while it is rented. What changes is that the sale carries a short list of duties, and those duties come from the Virginia Residential Landlord and Tenant Act, Chapter 12 of Title 55.1.
The provisions of this chapter shall apply to occupancy in all single-family and multifamily dwelling units and multifamily dwelling units located in the Commonwealth.
Va. Code 55.1-1201
That reach is broad, but the same section lists tenancies and occupancies that are not residential tenancies under the Act. One exclusion matters in a sale: occupancy under a contract of sale of a dwelling unit, where the occupant is the purchaser or someone who succeeds to the purchaser's interest. A buyer who moves in before closing under the purchase contract is not, by that fact, a tenant under the Act. What that occupancy agreement says is a contract question.
The lease itself has a writing rule too. Va. Code 11-2 bars any action on a lease of real estate for more than a year unless the lease, or a memorandum of it, is in writing and signed by the party to be charged or that party's agent. That is one reason the first document to pull out, before a listing, is the signed lease.
Two kinds of occupancy run on different rules and have their own pages. A farm lease on pasture or cropland is covered in what happens to a farm lease when the farm sells. An occupant under a rent-to-own or lease option agreement may also fall under Virginia's Residential Executory Real Estate Contracts Act, which keeps such a contract subject to the landlord and tenant act, explained in what a land contract is.
The tenant is told who bought the house and how to reach the new owner
The first duty is information. A tenant who has been paying one owner needs to know there is a new one, and the Act says what the notice has to contain.
In the event of the sale of the premises, the landlord shall notify the tenant of such sale and disclose to the tenant the name and address of the purchaser and a telephone number at which such purchaser can be located.
Va. Code 55.1-1216 B
Three items, then: the purchaser's name, the purchaser's address, and a telephone number where the purchaser can be reached. The section does not stop at the day of the sale.
The information required to be furnished by this section shall be kept current, and the provisions of this section extend to and are enforceable against any successor landlord or owner.
Va. Code 55.1-1216
So the buyer of a rented house steps into the same information duty the seller had.
Showings happen on notice, at reasonable times, and consent is not unreasonably withheld
A house is hard to sell if buyers cannot see it. Va. Code 55.1-1229 balances that against the tenant's possession, and it puts obligations on both sides.
On the tenant's side, subsection A 1 says the tenant may not unreasonably withhold consent to the landlord entering the unit to "exhibit the dwelling unit to prospective or actual purchasers, mortgagees, tenants, workmen, or contractors." Subsection A 3 adds a remedy that depends on the lease: if the rental agreement so provides, and a tenant without reasonable justification declines to let the landlord or managing agent exhibit the unit for sale, the landlord may recover damages, costs and reasonable attorney fees. Whether a given lease has that provision, and what counts as reasonable justification in a given case, are questions for an attorney.
On the landlord's side, subsection A 4 sets the terms of entry.
Except in case of emergency or if it is impractical to do so, the landlord shall give the tenant notice of his intent to enter and may enter only at reasonable times.
Va. Code 55.1-1229 A 4
The same subsection says the landlord "shall not abuse the right of access or use it to harass the tenant." Put together, showings of a rented house run on notice and at reasonable times. Whether the owner has to be present when buyers come through is a separate question, covered in whether you need to be there for showings.
Security deposits and the interest on them move to the new owner at the transfer
The money a tenant put down does not stay with the seller. The Act moves it with the property.
The current owner of rental property shall transfer any security deposits and any accrued interest on the deposits in his possession to the new owner at the time of the transfer of the rental property.
Va. Code 55.1-1213
The duty covers the deposit and any accrued interest in the owner's possession, and the timing is the transfer itself. A parallel rule for nonresidential rental property, Va. Code 55.1-1405, sets the same duty, so a rented shop building or commercial space carries the same deposit transfer; anything beyond that transfer on a nonresidential lease is for an attorney.
How the transferred deposit and any rent for the month of settlement show up at closing is set by the purchase contract. If the contract calls for a proration of rent, that is a contract term too. The exact entries on a particular sale are the settlement agent's, and how the statement reads line by line is covered in what a settlement statement is. The meaning of the closing itself is defined under settlement, and the separate question of splitting the year's real estate taxes is in how property taxes are prorated at closing.
Whether the lease binds the buyer is read from the lease, not from these three sections
The question sellers and buyers ask first is the one these statutes do not answer: does the lease survive the sale?
The sections on this page set duties around a sale. They require notice, deposit transfer and orderly access, and they make the notice duty enforceable against a successor owner. None of them says whether a particular lease continues after closing, ends at closing, or can be ended by the buyer, and no page here will guess. The answer depends on what the lease says, how long it runs, and how the purchase contract deals with it, and that reading belongs to a Virginia real estate attorney.
Pull the signed lease
Its term, its renewal language, and anything it says about a sale or about showings under Va. Code 55.1-1229 A 3.
Match the contract to it
Whether the buyer takes the house subject to the lease, and how deposits and rent are handled at closing, are written into the purchase contract.
Give the notice
On the sale, the landlord tells the tenant the purchaser's name, address and a telephone number.
Transfer the deposit
The security deposit and accrued interest go to the new owner at the transfer.
Listing a house that has a tenant living in it?
Send the address and the lease term. Lowell can give an opinion of value on the house and talk through listing it with the lease in place. No cost, no obligation.
Got it. Thank you.
We'll be in touch shortly with an honest read.
Questions this raises
Does a buyer who moves in before closing become a tenant?
Not under the Virginia Residential Landlord and Tenant Act, by that fact alone. Va. Code 55.1-1201 lists occupancy under a contract of sale of a dwelling unit, where the occupant is the purchaser or someone who succeeds to the purchaser's interest, among the occupancies that are not residential tenancies under the Act. The terms of that early occupancy are set by the agreement between buyer and seller.
Can a tenant refuse to let buyers see the house?
Under Va. Code 55.1-1229, a tenant may not unreasonably withhold consent to entry to exhibit the unit to prospective purchasers. If the rental agreement so provides and a tenant without reasonable justification declines a showing for sale, the landlord may recover damages, costs and reasonable attorney fees. The landlord must still give notice and enter only at reasonable times, except in an emergency or where notice is impractical.
Does the deposit transfer rule apply to a rented commercial building?
Yes, for the deposit itself. Va. Code 55.1-1405 requires the current owner of nonresidential rental property to transfer any security deposits and accrued interest in the owner's possession to the new owner at the time of the transfer. Other duties on a nonresidential lease sit outside the residential Act and are a question for a Virginia real estate attorney.
Where this page's facts come from
Every rule, office and figure above traces to one of these. Rules change; check the office before you act on one.
- Va. Code 55.1-1201, scope of the Virginia Residential Landlord and Tenant Act and its exclusions Virginia General Assembly
- Va. Code 55.1-1216, notice to the tenant on a sale of the premises Virginia General Assembly
- Va. Code 55.1-1229, landlord access and showings Virginia General Assembly
- Va. Code 55.1-1213, transfer of security deposits to a new owner Virginia General Assembly
- Va. Code 55.1-1405, security deposits on nonresidential rental property Virginia General Assembly
- Va. Code 11-2, writing required for a lease of real estate for more than a year Virginia General Assembly