Selling a rented flat: This is what you as a seller must bear in mind

You own a rented flat and now want to sell it? If so, you may be wondering what happens to the tenant in this case.

Do you have to terminate the lease or can the tenant be taken over by the future seller? Who offers themselves as a buyer for a rented property?

As an expert in real estate and an experienced real estate agent in Tyrol, I would like to provide you with answers to all these questions in this blog post.

Tenancy Law Act decides on procedure with the tenant when selling a flat

Depending on whether your flat is covered by the Tenancy Rights Act (MRG) or not, the tenant benefits from protection against termination. Legally, a distinction is made between three applications of the Tenancy Act: The full application, the partial application and the full exception.

Full and partial application of the Tenancy Act include protection against termination for tenants in the event of the sale of a flat

If the MRG can be applied in part or in full, the principle "purchase does not break rent" applies to tenants. Thus, the tenancy agreement cannot be terminated upon sale.

The MRG applies in full to:

• Subsidised new buildings - this includes rental apartment buildings that were built with a subsidy.
• Old buildings for which building permission was granted before 1.7.1953
• Houses with rented condominiums whose construction was approved before 9.5.1945

The MRG applies in part to:

• New buildings without public housing subsidies with a building permit after 30.6.1953
• Rented condominiums in buildings with building permit after 8.5.1945
• Rental objects in converted attics or superstructures with building permit after 31.12.2001
• Rental objects newly created by an extension with a building permit after 30.9.2006

Special termination rights for new owners in case of full exceptions of the Tenancy Act

If your condominium does not fall under any of the above categories, the Tenancy Act may not apply. This results in the new owner having a special right of termination after purchasing the flat.

This means that the buyer can terminate the tenancy in compliance with the statutory (or contractually more favourable) dates and deadlines.

But beware: If an unlimited tenancy right has been entered in the land register, he cannot terminate the tenancy agreement.

The full exceptions of the MRG include:

• One- and two-family houses with one or two flats: The tenancy agreement must have been concluded after 31 December 2001, otherwise the MRG is partially applied and the tenant receives protection against termination.

Further full exemptions of the MRG can be found on the page of the Chamber of Labour.

Selling a rented flat: Investors as ideal buyers

Rented properties are sometimes difficult to sell. Private individuals who are looking for a flat themselves do not fall into your target group. Investors, on the other hand, often look for properties that are already rented out, as this saves them the tedious search for tenants.

However, it is even more important that you have a professionally concluded tenancy agreement when selling a rented flat. Therefore, check your contract for the following points:

• Indexation: The tenancy agreement should state that rent adjustments can be made in the event of an increase in the cost of living.
• Enforceability of the fixed term: The lease agreement must state the end date of the ten ancy, otherwise termination of the relationship is not enforceable.
• Viewing clause: In rental contracts, make sure to include a viewing clause in the contract so that prospective tenants can view the flat.

In addition, there are formalities to be observed, which a legally trained real estate trustee, lawyer or notary can help to check.

Conclusion: Sell rented flat for legal protection with professional support

As you can see, selling rented properties is not that easy. Especially from a legal point of view, it is important to clarify whether the Tenancy Act applies or whether your flat is one of the full exceptions. Depending on the legal situation, the tenant can make use of protection against termination.

This can lead to you seeking investors as potential buyers and not being able to market your property to private individuals.

The tenancy agreement can also prove to be a pitfall for the sale: If, for example, no viewing clause was agreed in it, you cannot show the flat to prospective tenants and have to market it differently.

In addition, as a real estate agent in Tyrol, I have made the experience that some tenants look for a new flat when they hear about the sale. Then you have an empty property with a possibly higher material value, but investors are no longer interested in the property and the search for a buyer starts all over again.

Therefore, my recommendation is to seek the assistance of an estate agent when selling rented properties. He or she can first check the tenancy agreement and the legal situation for the tenant with you.

He also takes over the further sales procedure and makes sure to achieve a fair market price for your flat.

Do you still have questions on the subject or a rented flat that you would like to sell? Then contact us by phone(+ 43 512 580 242), by e-mail(immobilien@arealita.at) or via our contact form(click here) and make an appointment for a free initial consultation.

With kind regards

Yours, Bernhard Großruck

 

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