A termination upon sale clause is a statement that is often included in a residential lease agreement disclosing the potential termination of a lease in the event that the landlord decides to sell the property.
Termination Upon Sale Sample Clause
Below is an example of a termination upon sale clause that could be incorporated into a residential lease agreement:
The Landlord and Tenant(s) understand that this lease agreement may terminate at the Landlord’s discretion upon the sale of the property by the Landlord. The Landlord agrees to give the Tenant(s) ___ days written notice of the lease termination upon the sale of the property, and the Tenant(s) shall vacate the property at the end of the notice period. The Landlord agrees to provide Tenant(s) with ___ hrs notice before showing the Premises to prospective tenants. Providing there are no damages to the Premises, the Tenant’s security deposit holdings will be promptly returned to the Tenant.
Why Include a Termination Upon Sale Clause in a Lease Agreement?
Landlords may include a termination upon sale clause to give them the option of terminating the lease with their current tenants in order to sell their property.
If the landlord has included this clause in their lease agreement, the new owner is not required to take over the existing lease terms. For example, if the owner plans to move into the unit or wants to bring in new tenants, the existing tenants will have to vacate the property. However, the new owner may allow the current tenants to remain in the unit under new lease terms.
Can a Landlord Break a Lease to Sell a Property?
A landlord can break a lease to sell a property if the lease includes a termination upon sale clause. If this clause is not included, then a landlord cannot terminate the lease without the cooperation of the tenant.
Selling Property Without a Termination Upon Sale Clause
If a landlord wishes to sell their property but has not included a clause in the lease agreement, there are other options to consider:
- Offer a Cash for Keys Agreement – In this scenario, the landlord would offer the tenant money in exchange for vacating the property.
- Sell the Property But Tenants Remain – The landlord can sell the property if the new owner agrees to keep the current tenants through the remainder of the lease.
- Offer a Month-to-Month Lease Agreement – This will create more flexibility for both parties.
It is important to note that it’s illegal for a landlord to take any actions to try to get their tenants to leave the property—such as threatening eviction, lying about the lease terms, or raising the rent.
How Much Notice is Required From the Landlord to Terminate a Lease Agreement?
If a landlord decides to sell the property, they must provide tenants with proper notice. Notice requirements will vary depending on the location. Some states (such as California) require a 60-day notice even for month-to-month tenancies. Other states (such as New York) require 30 days’ notice for both month-to-month and year long leases.
What to Include in a Termination Upon Sale Clause
Landlords should address the following information in a termination upon sale clause:
- Required notice from the landlord for terminating the lease (e.g., 30, 60, or 90 days)
- Handling of the security deposit
- Required notice from the landlord for showing the property (e.g., 24 or 48 hrs)
- Acknowledgement that both parties understand the terms of the agreement
- Any additional terms or conditions the tenants should be aware of
A termination upon sale clause must be in compliance with both state and local law in order to be enforceable. Landlords should be sure to research rules and regulations before creating their agreement.
