Author Topic: Best time to give notice to vacate?  (Read 1277 times)

kenmoremmm

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Best time to give notice to vacate?
« on: November 10, 2018, 01:55:57 AM »
We are planning to sell a condo we own in Seattle and use the funds for a 1031 exchange.

The city of Seattle has a requirement that you must provide 90 days' notice of when they need to be out; they can leave earlier by their own doing, but 90 days would be the maximum limit.

The real estate market starts picking up here in very early spring - like late February. By the time June comes around, things are normally slowing down. My goal would be to get the place up for sale no later than tax day (4/15).

After the current tenants vacate, I anticipate 1-2 weeks for repairs and renovations that I will self-perform. Side note: my wife is due for kid #2 on Jan 18.

So, my question is: when do you see the best time to provide notice-to-vacate (NTV)?

Scenario 1: NTV 11/30 --- empty by 3/1: Pros, probably aligns best with my intended list date and then I can stop thinking about this transaction sooner. Cons, baby is 6 weeks old, low on sleep, possibility tenants could move out pre-holidays, meaning it would be vacant for the winter and we lose 2 months of rent.

Scenario 2: NTV 12/15 --- empty by 3/16: Pros, late in the month, there is little chance they would move out pre-Christmas, so I would pin them there. Schedule still generally okay. Cons, really shitty thing to do 10 days before what should be a fun time of year.

Scenario 3: NTV 1/1 --- empty by 4/1: Pros, zero chance of holiday vacancy and likely earliest vacancy would be 2/1, which would be nice for my timing (minus new baby). Cons, schedule starts to get compressed if they extend out all the way to 4/1, but baby is older, so maybe that's better.

The RE market is changing quickly in Seattle (going down, fast). Normally there is a spring bump, but with rising rates, Amazon HQ2, and craziness in politics, H1Bs, immigration, SALT deduction, etc, I'm seeing an unsettled market that I would rather be faster to get out of than slower. I sold another property last spring at the absolute peak, so got lucky there. This one will not be as fortunate.

Question 2: I'm going to float the idea to the current tenants to see if they want to purchase directly. If they don't, I anticipate listing for $320k after about $4-5k of upgrades (plus sweat equity - I'd say I'm adding $20k of value). If I offer it to them directly, what would be the number to offer it at? $300k? $295k? $285k? Realtor fees would be $20k if I do a traditional listing --- might be able to negotiate seller fees down. I doubt they're interested in purchasing since they signed a 3 year lease 6 months ago, so they feel more like perma-renters than interested in buying.

nwnative

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Re: Best time to give notice to vacate?
« Reply #1 on: November 14, 2018, 08:42:18 PM »
How are you going to give notice to tenants who have just signed a three-year lease?  Did I misunderstand your comment there? 

Regardless, I think you have some issues.  Even if your tenant is on a month to month agreement (no lease) the City of Seattle has very stringent rules regarding notice to tenants.  First of all, notice must always be given before the beginning of the rental period, for tenant to vacate at the end of a rental period.  If your rental period runs from the first of the month to the last day of the month, your notice needs to be given before the first of a month for the tenant to leave at the end of the month 90 days later. 

You may have a hard time getting a tenant out of a condo in Seattle.  If you are ending the tenancy because you want to sell a single family house, you can give 90 days notice for your tenant to leave, but I'm not sure you have that right with a condo.  You may end up having to sell with your tenants in place. 

We have avoided carrying any rental property in the City of Seattle because the laws are so heavily in favor of tenants.  Please be sure you check all the requirements before you do anything or you could be liable for fines and penalties over $5000.

Another Reader

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Re: Best time to give notice to vacate?
« Reply #2 on: November 14, 2018, 09:02:55 PM »
You have conveyed occupancy for another two and a half years.  You can give them 90 days notice three months before the lease is up.  You can sell with the tenants in place or wait.

kenmoremmm

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Re: Best time to give notice to vacate?
« Reply #3 on: November 14, 2018, 11:18:54 PM »
as i interpret these links, selling a property specifically constitutes grounds for providing notice to vacate:
https://www.seattle.gov/dpd/cs/groups/pan/@pan/documents/web_informational/dpdd016420.pdf
http://washingtonlandlordtenant.info/Seattle-Notice-to-Terminate-Tenancy.pdf

in talking with two realtors (one that i trust), they both believe my assessment to be correct, but obviously i need to get a real answer directly from the city it seems.

in terms of selling it while already occupied: big no-no, or do you think there's appeal to a potential investor?

Gronnie

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Re: Best time to give notice to vacate?
« Reply #4 on: November 14, 2018, 11:39:13 PM »
It very clearly states "The notice to terminate a tenancy may only be used to terminate a month-to-month
tenancy, not an unexpired lease."

MoseyingAlong

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Re: Best time to give notice to vacate?
« Reply #5 on: November 14, 2018, 11:43:28 PM »
The way I read those links selling is a valid reason to give 90-days notice to tenants on a month-to-month lease.
It's not a valid reason to break a lease.

I think you have a few options.
1..Offer it to the tenants, see if they want to buy.
2. Offer "cash for keys." That is, offer an incentive to change the lease to month-to-month or end early.
3. Sell while occupied. Lease transfers to new owner. Severely cuts your prospect pool to mainly investors.
4. Wait until the lease is up and sell then.
5. Try the 90 days notice and hope the tenants don't object/sue.

But I'm not a Seattle real estate lawyer. I'd check with one of those.

Good luck.

nwnative

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Re: Best time to give notice to vacate?
« Reply #6 on: November 14, 2018, 11:51:16 PM »
Seattle has made recent changes to its landlord/tenant laws, and if I recall, they eliminated the landlord's ability to give notice to an apartment tenant even if they wish to sell.  The documentation you provided specifically calls out single family residences when it talks about providing notice when the landlord wishes to sell, making me wonder if a condo may fall under the rules for apartment tenants.  Don't contact a realtor, contact an attorney so you don't end up in a mess.

Peachtea

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Re: Best time to give notice to vacate?
« Reply #7 on: November 15, 2018, 07:19:58 AM »
One of the links you provided addresses fixed lease term. Youíre reading in the month to month lease section, which you donít have. This is from the Seattle.gov link:

Quote
MAKING CHANGES TO A FIXED LEASE TERM
Under a lease, in most cases, changes during the lease term cannot be made unless both landlord and tenant agree to the proposed change.

If the property is sold. The sale of the property does not automatically end a tenancy. When a rental unit is sold, tenants must be notified of the new ownerís name and address, either by certified mail, or by a revised posting on the premises. All deposits paid to the original owner must be transferred to the new owner, who must put them in a trust or escrow account. The new owner must promptly notify tenants where the deposits are being held.

This is in plain language although not necessarily the best source: https://www.seattletimes.com/business/real-estate/tenant-obligations-when-rental-is-for-sale/

It doesnít look like you can terminate the lease, although consulting a real estate attorney to check would be a good idea. Iím a long term tenant with fixed lease terms and thereís no way Iíd move from a place I just leased for three years without generous compensation.


kenmoremmm

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Re: Best time to give notice to vacate?
« Reply #8 on: November 15, 2018, 11:24:33 AM »
thanks all for the input. looks like i misread here. bummer. had my eyes been more wide open 6 months ago, i'd probably have another $100k in pocket and no stress surrounding this sale. as the market here is correcting, every day is like a face punch.

Jon Bon

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Re: Best time to give notice to vacate?
« Reply #9 on: November 15, 2018, 11:42:18 AM »
Hey there is a silver lining here.... had you tried to get those tenants out they could have sued you and won!

I might try and list it anyways. Just use a flat fee person to get into the MLS. Make it clear its currently rented in the listing.

You could also try to buy your tenants out of their lease. Selling to them also would be an option. I've found it is generally pretty easy to negotiate with tenants. Also be up front with them telling them they have the right to stay, but it would be in your interest if they left. So how can you help them make it be in their interest to go? Pay them 3 months rent and 100% of SD?  If you really want to sell this place there are plenty of ways to make it happen. After all everything is negotiable in real estate.

therethere

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Re: Best time to give notice to vacate?
« Reply #10 on: November 15, 2018, 11:58:10 AM »
How did you even think this was going to work? Why would a lease only count when YOU want it to? IMHO it is pretty sleazy to sign a 3-year lease and want to sell within 6 months. That's the point of a lease!

It would take a lot of cash for me to leave 6 months into a 3 year lease. It costs money to move. I asked my landlord for 2-months rent, full security and pet deposit refund, all application fee refunds, and 31+ days notice. This was 2 months into a 1 year lease. They didn't bite. Instead, I stayed in the place while they tried to sell. I did not clean or even leave for showings. Eventually I had to barricade my door to ensure no one entered without giving me notice. I also posted a sign in the condo with all deferred maintenance that was needed because through all their actions my landlord proved to be a selfish jerk with no respect for us.

Moral of the story: If you do want to investigate selling still, the tenants are in charge at this point and you should do your best to stay on their good side.
« Last Edit: November 15, 2018, 12:00:38 PM by therethere »

kenmoremmm

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Re: Best time to give notice to vacate?
« Reply #11 on: November 19, 2018, 11:21:06 AM »
here's our proposed feel-out email to the tenants to get them out. LMK what you think:

After much discussion, my wife and I have decided that we need to simplify our lives now that we have a young family and would like to sell the condo unit. I am writing you to inquire if you would be interested in either purchasing the condo unit you're living in or ending your lease prematurely.  We are sorry to put you in this situation, but are hopeful that one of these options is appealing to you. We would propose one of the two following options if you are interested:

Purchase the condo from us at a sale price of $274,900. We believe the current fair market value to be around $310,000 based on discussion with realtors and comparison to recently sold properties in the surrounding neighborhoods. We are offering it at this significantly reduced price as an incentive to you.
End your lease on February 28, 2019. We would offer you one month's free rent plus costs to rent a moving truck not to exceed $200.

Please let us know your thoughts and if you are interested in the options above ideally before mid-December so we can take the necessary steps. If you're not interested in either option, we understand and you are entitled to continue your rental throughout the lease term length. We will likely pursue selling the unit on the open market while you occupy it and the terms of the existing lease will be honored by the new owner. Again, we are sorry for the hassle this causes and hope that you understand.



zygote

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Re: Best time to give notice to vacate?
« Reply #12 on: November 20, 2018, 10:00:23 AM »
I don't know if you've already sent the email, but if I were the tenant I would find your offer to end the lease early somewhat insulting. $200 for a moving truck seems really stingy. $200 + one month's rent would barely cover the cost of moving, even for someone who wants to do as much as possible themselves. If they are doing you a favor to move out, you should cover the cost of moving the easy way with movers, in my opinion. And that doesn't even take into account the hassle of them changing their plans and having to search for a new rental during the holiday season.

Caveat: I have lived in a rent stabilized apartment in NYC for almost a decade, and have turned down much more money to move out, so I may be biased in favor of the renters. Our landlord would love for us to leave so they can do enough renovations to rent the place out at market rate, but we love the apartment and we're not going anywhere. We have the right to renew the lease indefinitely, though, so that changes the calculation. They can't just wait until the lease is up.

I can't speak to your sale price discount, but that looks reasonable to me at a glance. If we could buy our current apartment we would, but the individual units in our building aren't for sale.

therethere

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Re: Best time to give notice to vacate?
« Reply #13 on: November 20, 2018, 11:28:57 AM »
Agreed. It's cheap. They JUST moved in. It usually costs me 1-1.5k to move in-town with a truck, cleaning/moveout expenses, overlap of leases (for days of moving), time away from work, application fees, startup organization, etc. That doesn't even account for all the time involved in searching for a new place, especially around the holidays. $200 just for a truck is ridiculous. Are you going to offer to move all their crap?


Also, listing it with tenant in unit is really selfish as I said before. It's not their fault the market is leveling out. Be prepared to either not be able to show the unit, or to have tons of cancellations and hassles in setting up showings. At that point it is actually the tenant doing all the work selling the place. Not you. Tenant gets all the work and no gain. Make sure you are very clear with prospective buyers that the condo is rented for another 2.5 years. I can't tell you how many people viewed the unit I was in who didn't realize there were tenants with a lease. So much wasted time and frustration. 

I'm not sorry for being harsh. If you sell you are putting your tenants through hell. I've lived it. There's really no excuse.
« Last Edit: November 20, 2018, 11:31:31 AM by therethere »

theoverlook

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Re: Best time to give notice to vacate?
« Reply #14 on: November 20, 2018, 01:05:32 PM »

Also, listing it with tenant in unit is really selfish as I said before.
Sorry, I'm going to have to strongly disagree here. Rental properties change hands with tenants in place all the time, and it's unreasonable to expect a landlord to avoid listing a property just because they have tenants in it. They have to be respectful of the tenant's time and privacy, but that doesn't mean you can't sell a place once you have tenants in it. That's ridiculous.

Jon Bon

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Re: Best time to give notice to vacate?
« Reply #15 on: November 20, 2018, 01:08:42 PM »
I agree with what other others have said, and your letter does come off rather poorly.

I would recommend have a conversation or conversations about this with your tenants. Going back and forth via email is not to go well with you guys. I would go to them hat in hand, buy them a cup of coffee or what ever ask them hose things are going, and take it from there.


If they say "Oh we LOVE the place!" Then maybe see if you might be able to get them to buy it.  If they are less ecstatic talk about how your are trying to sell the unit, but be sure to tell them they have tenants rights, and that you would be happy to let them out of the lease if they were thinking that way. Because you know the new owners probably wont take as good care of it as I do etc etc.

IMO 3 years is a long time for a lease, granted I have no information about your renters but they might be interested in ending early. It might not be ending the lease a week after you have the conversation, but you might be able to end it after 12 or 18 months.  I would not send an official letter like that. IMO official letters are for bad things. Evictions, rate hikes, utilities shut offs etc.

Good luck! Unless your people are super happy where they are, I dont think ending the lease early should be impossible.

Oh and @therethere , it is the OP's asset, he can sell it whenever and however he wants.
« Last Edit: November 20, 2018, 01:12:39 PM by Jon Bon »

therethere

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Re: Best time to give notice to vacate?
« Reply #16 on: November 20, 2018, 02:46:48 PM »

Also, listing it with tenant in unit is really selfish as I said before.
Sorry, I'm going to have to strongly disagree here. Rental properties change hands with tenants in place all the time, and it's unreasonable to expect a landlord to avoid listing a property just because they have tenants in it. They have to be respectful of the tenant's time and privacy, but that doesn't mean you can't sell a place once you have tenants in it. That's ridiculous.

I'm not saying you can't sell it. Of course people sell with tenants in place all the time. You can do whatever you want of course. I'm saying if you do sell you have to be clear to sell it to investors only. Because if you start wasting the tenants time with a lot of bulls* it's not going to end well.  And I suppose I'm reading between the lines, but a 300k condo is usually targeted to buyers who want to live in the property, not investors. Since the OP didn't realize a lease is a binding document, I did make the assumption they are not a seasoned landlord and have not done this before.

I'm simply saying the tenants hold a lot of cards and can make this process miserable if you step on any toes. So it's best to keep them happy. For instance, having showings all the time like a standard listing will get old quick. 24 hour notice for this situation is not reasonable all the time. Set up a schedule and stick to it. Or do no showings until offer. Lots of little things like this can go a long way. But skimping out on a cash for keys offer and then stating you'll sell it regardless is not the way to start off on the right foot.

Remember that tenants are people too. So selling it "whenever and however he wants" has implications even if you just see it purely as a business deal. You'd understand if you ever had people randomly walk into your place without notice while you are in the shower. Or having your landlord blast your expensive personal belongings on zillow listings that never go away.
« Last Edit: November 20, 2018, 02:57:25 PM by therethere »

Jon Bon

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Re: Best time to give notice to vacate?
« Reply #17 on: November 20, 2018, 05:35:52 PM »

Also, listing it with tenant in unit is really selfish as I said before.
Sorry, I'm going to have to strongly disagree here. Rental properties change hands with tenants in place all the time, and it's unreasonable to expect a landlord to avoid listing a property just because they have tenants in it. They have to be respectful of the tenant's time and privacy, but that doesn't mean you can't sell a place once you have tenants in it. That's ridiculous.

I'm not saying you can't sell it. Of course people sell with tenants in place all the time. You can do whatever you want of course. I'm saying if you do sell you have to be clear to sell it to investors only. Because if you start wasting the tenants time with a lot of bulls* it's not going to end well.  And I suppose I'm reading between the lines, but a 300k condo is usually targeted to buyers who want to live in the property, not investors. Since the OP didn't realize a lease is a binding document, I did make the assumption they are not a seasoned landlord and have not done this before.

I'm simply saying the tenants hold a lot of cards and can make this process miserable if you step on any toes. So it's best to keep them happy. For instance, having showings all the time like a standard listing will get old quick. 24 hour notice for this situation is not reasonable all the time. Set up a schedule and stick to it. Or do no showings until offer. Lots of little things like this can go a long way. But skimping out on a cash for keys offer and then stating you'll sell it regardless is not the way to start off on the right foot.

Remember that tenants are people too. So selling it "whenever and however he wants" has implications even if you just see it purely as a business deal. You'd understand if you ever had people randomly walk into your place without notice while you are in the shower. Or having your landlord blast your expensive personal belongings on zillow listings that never go away.

Ok yeah I see your point. Sure sounds like to me that someone broke the law selling your house. I would not dream of barging into my houses without giving specific notice and type of entry. Showing at 5pm, or plumber at 8am. Not giving notice is a felony.

If OP does list it. Yeah be sure you list it as currently leased.  Best not to step on anyone's toes. Honestly sounds like your situation was strange, why waste everyone's time showing a house that is for a primary residence while it cannot function as the buyers primary residence?!




JoJoP

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Re: Best time to give notice to vacate?
« Reply #18 on: November 22, 2018, 08:52:12 PM »
In California, a lease would go with the property.   Yes, you can sell a place with the tenants in place, but, unless the rent covers the potential  mortgage payment, most investors wouldn't be interested.  Does the rent cover the mortgage for, say, 270K?  250? 200?  That number would give you a ball park figure of what down payment would be needed to be appealing to an investor.   

You can advertise it for sale and show it by appointment, but this does tend to make tenants cranky. 

I wouldn't send that email.  It's hostile and not very enticing.   It will set you up for a stressful situation in which you really want and need their cooperation.    You should go sit with them... feel them out.  Bring them a gift card for Christmas.  And be very, very nice.