State Specific Question About: WISCONSIN (WI)

This relates to a property in MADISON, WI.

I own a house which I am currently renting out. The tenants have a lease through 7/31.

I am selling the house to a buyer who plans to rent the house out also, with a lease starting 8/15.

The buyer, understandably, wants to be able to show the property to prospective tenants prior to the current tenants moving out at the end of July.

It's my understanding that I can designate the buyer as my agent and give her permission to show the property (at reasonable times and with 24-hour notice, of course). My tenants think otherwise and are threatening legal action if the buyer enters the house to show it. (I'm out of state, by the way, so can not be there physically.)

Who's right?

(And by the way, yes, the tenants want to stay and no, the buyer does not want to rent to them.)

Cheers,

Are you willing to be held responsible for anything the buyer does or says to your current or their prospective tenants? I would NOT.

Without the current tenant's cooperation, it is almost impossible to successfully show a property, so although you would win if the tenant filed this case, it is irrelevant.

Buyers do have a right. Once the contract has been signed and sealed the property belongs to that buyer. The buyer doesn't have title yet but does own it contingent on final payment from seller but does have an invested right. One can owe a property and never record a deed. But they still own the property and therefor can be suid.

Agree with Wallace. Buyer has no right to be in the property until he owns it.

Your tenants are correct, in this case. Keep the buyer out. It won't work to your advantage anyway, as the uncooperative tenant will do all he can to sabotage you/the buyer.

There is no sale without a "consideration". If the buyer has not paid, the buyer does not own the property or have a right to it.

Agree with everyone who said not to let the buyer show. If the buyer does something wrong you will be held responsible.

Hi all. Thanks for all the advice.

Okay, here's another question. Can I (or my property manager) show the property to prospective tenants, and then transfer the lease to her after closing?

The reason this is particularly challenging in Madison is that the entire city operates, stupidly, around an 8/15 move date. 90% of leases start on that date. So, if she waited until we closed after the end of the existing lease, she'd have only 2 weeks to find tenants for that date, after which her pool of applicants will get much, much smaller.

Of course, this would all be a lot easier if the tenants would just be cooperative -- either way, they're going to have to have people in their house, whether it's her potential tenants or my potential buyers because they make this sale fall through. More than a little frustrating.

Anyway, thanks for the info, and do let me know if I can show the place to tenants and then transfer the lease.

Thanks!

Jenn

You should be able to show and then transfer the lease. Although if I were a buyer I would rather have the property vacant at closing and find my own tenants. I wouldn't want a seller who doesn't have a stake in finding good tenants be responsible for finding tenants for me.

Natalie, thanks!

To answer your question -- the purchase contract does not specify that, but the issue was discussed at length with the buyer, who made it clear that she was not interested in buying the house unless she could show it during the summer, and also that she was not interested in closing earlier and taking over the existing lease.

If she decided to pull out based on not having access to show the house, I would not contest it, because I clearly consented to that after having been advised (by two attorneys and other property owners) that it would not pose a legal problem.

My property manager is currently showing the house to two sets of prospective tenants on MY behalf. I will just have to take the risk of getting sued at this point.

Have I mentioned how glad I am to be getting out of this business?

Thanks again to all for the replies and advice!

JD

Hi Wallace. I understand your point, but again, Madison has this bizarre mitigating factor which is that almost all leases start on August 15, and it's very difficult to find tenants after that date. So that puts the buyer between a rock and a hard place if she has to wait until closing in early August to be able to show the place. Most tenants, certainly most good ones, will have already obtained fall housing by that time.

In any event, the tenants refused entry even to my property manager today, so now I move on to the next step and find out if I have any recourse.

You all may be right, and I may have no rights here, but both attorneys involved (mine and my buyer's) think otherwise.

The buyer is a friend of mine and both of us would really like to make this deal, but she will probably back out if she can't show until August. That's just the reality of the situation.

Again I appreciate all the advice. Thanks!

You or your PM definitely have a right to show the property... the problem is that your tenant is hostile at this point and refusing showings. The only way you can deal with that is give them notice to cure or quit... does their lease agreement have anything in regards to showings, most leases do.

Thanks again, Natalie!

The lease of course has a clause about the landlord's right to show the property to prospective tenants or buyers (doesn't even say whose, in fact), and also makes clear that my property agent represents me (the landlord).

Tenants hold firm and say they're "willing to take their chances in civil court," and of course I can't force an entry if they refuse. Seems like some kind of legal action is going to be necessary on my part unless they yield.

Whole situation is just kind of absurd, but it's just a problem to be solved at this point. Appreciate all the input; you guys are great!

JD

Jenn, the 15th is a tradition that wont be changed in Madison, just have to live with it. I think your best option is to have your PM run new tenants through but allow the new buyer to approve/pick who they will want, then the new lease will follow the house sale and everybody is happy. Oh wait, not everybody, you still have the old tenants that dont want to move.

For them, if they cause a fuss, your gonna have to get tough and maybe even evict if needed. Might want to have a sweet little talk to them so they know your are for real and will evict if needed. If they have 2 brain cells to rub together, they will know that over 90% of downtown rentals are ran by fairly large operations and they do a pretty good background check and an eviction will show up pretty quickly thanks to CCAP. If the tenants know you mean business and will file an eviction, they will straighten out as ALL the roomates will be blackballed with a poor rental history.

BTW, forget about everybody above that is saying this is not your problem or wait till the house is sold or whatever. They dont understand the time honored tradition of the entire downtown moving out and into the new place in a single day. I think you need to work with the new buyer to make them happy because the house is really not sold till you have the cash...

J.D. I've read your posts--everyone's posts twice trying to get a handle on your attitude. Maybe I have missed something. You have a buyer(which you want) and that buyer has made all sorts of stipulations/demands and you have given in to them because then purchasing the property is best for you.

But, you really have NO obligations to give them any such privileges--whereas you DO have a contract with your tenants that gives them the rights and privileges to the home until the end of their lease. Why are you screwing your tenants to placate the wants of the buyer? The tenants will have to move out at the end of their lease no matter WHO owns the property. Why are you forcing upon them the unwanted attentions of your future buyer? I would never do this to any of MY tenants. As long as the are paying the rent--they have a right to expect a certain level of privacy--and and some trust that you should be protecting them from such abuse--and upholding your side of their lease.

The buyers KNOW the 15 Aug unwritten lease rile as well as you do. But they shd not be putting this kind of pressure on you. So they will have less tenant pool after they own the property--well too bad for them. They could have bought the property in Jan or March and inherrited the tenant, and them getting the tenant out would have been their problem. But instead they agree to purchase the house in June with YOU as their front man to bully the present tenants out of the calm enjoyment of THEIR home MONTHS before the have to move.

Whoa, whoa, whoa.

First of all, it's in the law and the lease that I as landlord (or my agent) has a right to show the property to "prospective tenants or buyers" at ANY time once the lease is 1/4 up, as long as it's at reasonable times, for not an excessive amount of time, and with 24 hours notice. That is standard, and not remotely a violation of any tenant's privacy rights. It is one of the downsides of renting, but it's hardly a violation of anything since they agreed to it when they signed the lease.

If this buyer falls through, I will have to list the property with a real estate agent, who again can show the house (within those parameters) to as many people as she wants for the next 2 months (NOT 2.5 months, by the way; the tenants' lease ends 7/31). So, let's be clear that the tenants have no absolute right to privacy any time once the lease is 1/4 complete. I'm not "screwing them," I'm looking after my interests within my rights.

Neither the law nor the lease specifies, as near as I can tell, whom I can and can't appoint as my agent, nor that the "prospective tenants and buyers" have to be mine. Finally -- any prospective tenants COULD end up being mine (or buyers, even) if the current sale contract falls through for some reason. I can change my mind at any point, decide to keep the property and rent it out again. Are you saying in this instance I wouldn't have the right to show the house? Or even to show it now so that if things fall through I have a backup? That's absurd.

I am of course going to be discussing this further with legal counsel, but I'm very, very clear that I have the right, as the landlord, to show the property to prospective tenants. That, at least, is 100% black and white.

Thanks, all.

Others have said it over and over again. DON'T show it or let anyone else show it. Let the tenant live in peace.

The whole 8/15 move date thing is not YOUR problem. Your problem is following the provisions in your current lease.

If the 8/15 thing is a serious enough problem with the new owner, let them move up the closing date.

Furthermore, if you let the new owner screw the current tenant, you'll probably lose the sale. If I were the tenant, I'd find a way. I'd talk termites, foundation troubles, go to the bait shop and buy 1000s of crickets to unleash in the attic, etc.

J Dungan, IMHO, you are getting a little hung up on what may be your legal right (to enter, having given 24 hrs notice) and not worrying about what is the best practical approach.

A tenant who does not want you to show the house will either A) not let you in, or B) sabotage your showing by telling the prospect the house sucks, the LL is an ass, etc, or C) won't be there.

If it's A, what are you going to do next? Call the cops, terminate the tenancy?

If it's B, you're wasting your time showing.

If it's C, the place will be a wreck, and again, you're wasting your time.

Why not attempt to motivate the tenant by offering them something in exchange for a pleasant showing of a well-kept house, i.e. a bonus if the place gets rented?

You will just have to trust me when I tell you that the tenants are hostile already, and will be no matter what I do.

It's a complex situation and I realize everyone can't, understandably, see the full picture. I will figure it out one way or another. Meantime, I sincerely appreciate everyone's good advice.

Campus property? You have to show it now or it will may be vacant next year?

Can you make a deal with the tenants: as in a couple of hundred dollars (or name your amount) if the unit gets rented in the next month? Just let the prospective buyer approve the next set of tenants.