Hello, Best Beloveds! In going through our extensive call log (help us change that!), I realized that there are two calls we get frequently, and they complement one another:
- "My landlord is selling the property! What do I do?"
- "I just bought a property with tenants in it! What do I do?"
When a rental property is sold, and there are tenants living inside, there are some pretty easy (and specific!) rules about how everyone should handle the situation. I've realized we don't have a lot on this here website about changes of owners where the property is simply sold, so I'm changing that, right here, right now.
The Laws: The first place that we look is always with the laws themselves.
ATCP 134.04(1) says:
(a) The landlord shall... disclose to the tenant in writing, at or before the time a rental agreement is entered into, the name and address of:
1. The person or persons authorized to collect or receive rent and manage and maintain the premises, and who can readily be contacted by the tenant; and(b) A landlord shall keep tenants informed of changes, if any, in the information required under par. (a). The landlord shall mail or deliver written notice of each change within 10 business days after the change occurs.
2. The owner of the premises or other person authorized to accept service of legal process and other notices and demands on behalf of the owner. The address disclosed under this subdivision shall be an address within the state at which service of process can be made in person.
- Wis. Stat. 704.09(3) says: "All covenants and provisions in a lease which are not either expressly or by necessary implication personal to the original parties are enforceable by or against the successors in interest of any party to the lease. However, a successor in interest is liable in damages, or entitled to recover damages, only for a breach which occurs during the period when the successor holds his or her interest, unless the successor has by contract assumed greater liability; a personal representative may also recover damages for a breach for which the personal representative's decedent could have recovered."
What We Think the Laws Mean:
- ATCP 134.04(1): Tenants need to receive written notice within 10 days of a change of owner or manager (or change in contact information).
- Wis. Stat. 704.09(3): Old leases apply to new owners. New owners can be held responsible for problems under the lease, but only for problems that occur once they become owners. Sometimes, new owners can be held responsible for past problems if something is specifically written in the lease.
- We aren't attorneys, so this is our perspective on the law, but it might not be the most correct one (though we try hard to make this as accurate as possible). If what we've written here doesn't sound right to you, read the laws themselves (linked), and talk about it with someone you trust. For help finding an attorney, check out our attorney referral list.
- The 10-day written notice rule does not apply to owner-occupied complexes with four units or less. It is assumed that tenants will be able to contact the landlord in these situation, since the owner lives in the building.
- These laws do not apply to foreclosures! It's a whole different ball game. For more information on foreclosures, see my recent post, available here. Foreclosures are not the same as a sale of a property, in terms of the relationship between tenant and landlord. In foreclosures, new owners have more capacity to ask the tenant to leave with little notice, and to ignore a lease agreement.
Tips for Tenants:
- If you think that your property is being sold, don't stop paying your rent! There is never a point in that process where you are released from your responsibilities as a tenant.
- If your house is being shown: When real estate agents get involved, it can be tough for tenants. So, yes, real estate agents can be "agents of the landlord" and can, therefore, say that they want to come over. They must follow the laws about landlord entry (here). They can't make you to stage your apartment (you still have "exclusive possession"), and they can't make you leave when they come over to show the house. Now, you may choose to comply with these kinds of demands, especially if you have things that you want - a reduction in rent, possibly, or to be released from your lease. Use negotiation strategies, and get all agreements in writing.
- If you have any unwritten agreements with the landlord, this is the time to write them down. (For example, you mow the lawn and get a $10 discount on rent during the summer. You're allowed to have a dog. The landlord splits the water bill between the two duplexes). Make sure to write down the things that are "just how we do it." These agreements will be binding for the new owner, but only if you can prove they exist.
If somebody totally new comes up to you and says, "I'm the new owner! Please pay me the rent!," then you might be skeptical, and for good reason. Some steps to take:
- In order to figure out who is the person (or business) that owns the property, you can check with your City Assessor. They have the legal name of the titleholder, so that they can tax the owners. Look for your city assessor's office/online lookup. (Madison's is here, Milwaukee's is here, and you can search online for others).
- You can also just send the rent to the owner information that you currently have. Keep a photocopy, and make that copy available to the new owner. The new owner and the old owner can work it out amongst themselves - you don't have to be referee. Do make sure you can prove you paid your rent, though.
Tips for New Landlords:
The old lease is valid! You are now landlord to these tenants who are currently living in the property.
- If you didn't know there was a tenant living there, then that could be a big problem! But it's not covered under tenant-landlord law. Keep track of your costs, talk to a real estate attorney, and you could possible hold the previous owner or your realtor responsible for any expenses you incur because of misrepresentation.
- You can always negotiate with current tenants to either change the lease, or ask them to move out early. They are not required to agree to this, so make the deal sweet enough that they can't refuse. Make sure you get all agreements in writing, and if you all decide to end the contract they have, you might want to fill out this form.
- You are required to be the landlord! If you don't know what that means, you can come to one of our seminars to learn, hire a manager, or go by trial and error. You are required to do repairs to make the home livable/up to code, give notice when entering the property, and act in a way that is neither retaliatory nor discriminatory. You are required to pay back the security deposit when the tenant leaves, so make sure you have the funds/information to be able to do so. If you have month-to-month tenants living in the property, make sure you give the right notice in writing, with the right timing, when you are asking them to leave.
- Your best protection is a good paper trail. The first thing you should do as owner of the property is to send a letter to the tenant saying that you're the new owner, and that all rent should be sent to you, and how they should contact you if there's an emergency, or legal papers to be served. Tips on writing a letter are here. If you're confused about agreements that they have with the old landlord, make sure you seek that out, and ask for copies of written agreements.
* Hi! Did you know that we are not attorneys here at the TRC? And this isn't legal advice, either. If what we've written here doesn't sound right to you, talk about it with someone you trust. For help finding an attorney, check out our attorney referral list.