Selling a Rental Property During the Lease: Can a Tenant Preclude the Landlord’s Real Estate Agent from Showing the House?

            Landlords sometimes need to sell their investment property while leasing to a tenant. When this occurs, the landlord wants to enter the premises; but the tenant is understandably frustrated and concerned about this proposed invasion of privacy. A landlord is not required to wait to sell his or her property because it is a rental. Similarly, a tenant cannot be deprived of a place to live only because the landlord sells the property. The landlord must sell the property subject to the lease—i.e., the new owner must abide by the lease terms and let the tenant stay until the end of the lease. Under this circumstance, the selling landlord must reveal the existence of the lease and other material terms to any prospective buyer.

            Unsurprisingly, tenants do not want their rental to be sold to a new landlord. They have their own schedule and may not want to accommodate an open house or private showings for prospective purchasers. When addressing these issues, the key factor is reasonableness. The landlord and tenant should both act reasonably and respectfully and discuss general parameters for the upcoming sale of the property. Working cooperatively is the best path to success. If the parties cannot get along, however, California Civil Code section 1954 governs the landlord’s right to enter the dwelling or property that will be shown to potential purchasers.

            This article concerns a landlord’s right to entry when marketing and selling real property. For other situations when the landlord wants to enter the property, see this article.

Can my landlord leave a voicemail that the property will be entered by a real estate agent and potential buyers?

            Yes, but only after written notice. Civil Code section 1954(d)(2) states that notice may “be given orally, in person or by telephone” if the tenant has been notified in writing that the property is for sale during the previous 120 days. Let’s break that subsection down.

            If the landlord wants to sell his or her property, the landlord must first provide written notice to enter the property. Civil Code section 1954(a)(2) provides that showing the property to potential purchasers is an allowed basis to enter the property. Once that written notice is provided in compliance with Civil Code section 1954(d)(2), the landlord can thereafter provide verbal (oral) notice of an intent to enter the property during the next 120 days. The original written notice must be personally delivered or, if mailed, must be at least 6 days before the landlord wants to enter for the first time. After that, verbal notice is all that is needed, and the landlord must give “reasonable” notice—which is twenty-four (24) hours.

What days and times can a landlord enter the property?

            The landlord may only enter during normal business hours, or Monday to Friday, 8:00 a.m. to 5:00 p.m., unless the tenant consents otherwise or is present during the entry, there is an emergency, or tenant has surrendered the premises. See Civil Code § 1954(b).

Wait – so a landlord (and its real estate agent) cannot enter the property on a weekend? 

            In Dromy v. Lukovsky, 219 Cal.App.4th 278, 286 (2013), the court dealt with a dispute where the tenant refused to permit an open house on a weekend. The landlord believed this was an undue barrier to his ability to sell the property and commenced a court action to interpret the language of Civil Code section 1954. The trial court balanced the competing interests between the landlord and tenant and determined that the landlord’s real estate agent could hold open houses only twice per month and during limited afternoon hours. On appeal, and the California Court of Appeal acknowledged that:The plain language of the statute limits the time period during which a landlord may exhibit a dwelling to a prospective or actual purchaser. Unless the tenant agrees otherwise, a landlord may only exhibit the dwelling during “normal business hours.” Nothing in the statute, however, defines this phrase.

            The court thereafter reviewed the trial court’s decision to balance the tenant’s right to live without too much intrusion and the landlord’s right to show their property to prospective purchasers and affirmed the analysis. The court held “that the term ‘normal business hours’ in [Civil Code] section 1954 means objectively reasonable hours under the facts and circumstances of the case, keeping in mind the right of tenants to quiet enjoyment and the right of landlords to sell their property.” This means showing the property for sale during the weekends can be considered “normal business hours” under California law.

Takeaways – Balancing the competing rights, be fair, and communicate.

            Selling a property during an ongoing tenancy is a difficult situation for both a landlord and tenant. The landlord must strictly follow California law regarding notice procedures to enter the premises. The tenant is living in the residence and has certain rights; but these do not let a tenant simply refuse to cooperate. The best method to resolve these issues is transparent communication and a negotiated agreement to let the house be shown to the public for a reasonable amount of time and when the tenant is comfortable leaving the property. Tenants must accept that renting a property means it could be sold to another person during the lease. Landlords must accept owning your property does not give you rights to unfettered access for public showings or open houses if you leased the property to a tenant.

            Contact an experienced real estate attorney with questions about landlord/tenant issues, working with realtors, selling or purchasing a house, condo, multi-unit, or other property and providing notices to tenants, or liability concerns.

            Author Ethan Birnberg is a business attorney licensed in California, Nevada, Colorado, and Wyoming and recent voted the “Best Attorney” in Truckee and North Lake Tahoe. He regularly assists clients with real estate issues, land use, landlord/tenant matters, HOA disputes, and all types of asset sales, acquisitions. He holds dual certifications as a business bankruptcy and consumer bankruptcy specialist from the American Board of Certification and has extensive insolvency experience helping entities seeking to restructure under chapter 11 of the U.S. Bankruptcy Code, borrowers and lenders seeking out-of-court workouts, representing chapter 7 trustees, and advising directors, officers, and executive management regarding fiduciary duties and corporate governance issues. You can reach him at birnberg@portersimon.com.

Porter Simon Law is a full-service law firm with attorneys licensed in California, Nevada, Colorado, and Wyoming. Its personal injury practice is called Porter Simon Sierra Injury Lawyers. Its lawyers have decades of experience representing clients in and around Truckee, Tahoe Donner, Tahoe City, Carnelian Bay, Dollar Point, Kings Beach, Tahoe Vista, Hobart Mills, South Lake Tahoe, Meyers, Homewood, Incline Village, Crystal Bay, Portola, Graeagle, Calpine, Downieville, Whitehawk, Loyalton, Sierraville, Nevada County, Placer County, Placerville, Granite Bay, Rocklin, Sierra County, El Dorado County, San Joaquin County, Madera County, Mono County, Mammoth Lakes, June Lake, Bridgepoint, Washoe County, Douglas County, Elko County, Reno, Carson City, Gardnerville, Roseville, Sacramento, Auburn, Chico, Oroville, Healdsburg, Santa Rosa, Elk Grove, Markleeville, Gardnerville, Carson City, Fairfield, Fresno, Folsom, Redding, Walnut Creek, Santa Clara, Stockton, Sonora, Manteca, Merced, Nevada City, Grass Valley, Newcastle, Turlock, Tracy, and Yuba City.