Can I sell my milwaukee house with tenants living there?
Every so often, landlords in Milwaukee, Wis. inquire if they can sell a property that has tenants in place. The answer to that question is yes. However, there are certain forms that landlords must fill out before selling their property, as well as certain financial records they should consider keeping.
If you’re a landlord in Milwaukee County and want to sell your property that has tenants in place, this article will tell you what you need to know.
Tenant Estoppel Certificate
Every landlord must fill out a Tenant Estoppel Certificate. According to TheLawDictionary.org, an estoppel certificate is a “signed statement by a party (such as a tenant or mortgagee) certifying for another’s benefit that certain facts are correct, as that a lease exists, that there are no defaults, and that a specific rent amount is paid to a certain date. A party’s delivery of this statement estops that party from later claiming a different state of facts.”
Put in layperson’s terms, a Tenant Estoppel Certificate is a certified statement by a tenant that verifies the terms and conditions and current status of their lease. The tenant certifies crucial elements about their lease, such as:
- The start and expiration dates of the lease
- Money owed over the course of the lease
- Contact information for both parties
- Information on lease renewal and extensions
- Notifications of both parties’ rights and responsibilities as per the lease
- Information about who pays utilities, owns appliances, security deposit amount, and more
Tenant Estoppel Certificates are critically important and a sale cannot go through without agreement on its terms and conditions.
Additional rent-related information
Landlords should also have other rent-related documentation ready to satisfy potential demands of a buyer. At Fair Deal Home Buyers we always request a copy of a seller’s homeowner’s insurance, as well as proof that their tenants paid rent on time. Sometimes—but not always—we request rent rolls and P&L statements, mainly for properties that have a lot of units.
A rent roll shows rental income from a property. This is important information for buyers because it helps them determine the value of the property. Rent rolls include information about a property, such as:
- The type of property (single-family house, multi-unit, etc.)
- Zoning information (residential, mixed-use, urban, suburban)
- Housing and unit data (square feet, number of bedrooms and bathrooms, lot size, parking info, storage, and amenities offered)
- Tenant information (name, monthly rent, additional fees, rent due date, past due rent, prepaid rent, security deposit held by landlord, lease start and end dates, etc.)
- Rental income summary (the total monthly and annual rent collected, additional annual fees such as carpet cleaning, pest control, or landscaping)
A profit and loss statement—also called P&L statement—is important because it summarizes income, expenses, and net operating income over a specific period of time. This is also helpful for buyers in determining the value of your rental property.
But, it’s also valuable for landlords for the exact same reason. P&L statements can help maximize net operating income (NOI). If you’re a landlord and you don’t do P&L reports, you should reconsider.
And finally …
Landlords should also be prepared to fill out a Property & Title Information sheet, as well as documents required by title companies, such as an Authorization to Obtain Information Commitment document, which is required of all sellers, not just landlords.