You don’t have to wait for a lease to end or empty the property to sell a rental in Michigan. Many rentals sell with tenants in place. The parts to get right are the leases, the security deposits and any open city tickets.
The lease
Selling the property doesn’t, by itself, cancel a lease. Read each lease for anything about a sale or about entering the unit, and talk to an attorney before giving any tenant notice to leave. A buyer who keeps the tenants takes over as landlord at closing.
Security deposits
Michigan law keeps you liable for a tenant’s security deposit after you sell until one of three things happens:
- you transfer the deposit to the buyer and mail the tenant a notice with the buyer’s name and address,
- the buyer takes over the deposit under the law’s requirements, or
- you return the deposit to the tenant.
In practice, deposits are usually credited to the buyer at closing. Then you mail the notice.
City rental rules
Many Detroit-area cities require landlords to register rentals and pass inspections. In Detroit, rentals need a Certificate of Compliance, and unpaid violation tickets can become a lien collected through the property tax bill. A missing registration or open ticket doesn’t stop a sale, but it affects price and the work the next owner takes on. Our city pages cover the rules in Detroit, Dearborn Heights, Redford, Southfield and Pontiac.
What to gather before you sell
- A copy of each lease, or a note that a tenant is month-to-month
- Current rent, what’s paid and what’s owed
- Security deposit amounts
- Any open city tickets, registration status and inspection reports
- Repairs you know are needed
Tenants who aren’t paying
A rental with a tenant behind on rent, or an eviction underway, can still be sold. Tell the buyer exactly where things stand so the offer reflects it.
Getting an offer with tenants in place
We buy rentals with tenants in place, paying or not, and usually need one walk-through instead of repeated showings. Give tenants notice of that visit as your lease requires. Tell us about the property and include the rent and lease details in the notes.
This guide is general information, not legal or tax advice. Laws and city rules change, so check the sources below and talk to an attorney about your situation.