Selling a House with Renters in Arizona: What Landlords Need to Know
Selling a property with existing tenants in Arizona requires careful navigation of both landlord-tenant law and real estate regulations. Arizona landlords must honor existing lease agreements when selling rental property, while providing proper notice to tenants as specified under Arizona Residential Landlord and Tenant Act.
Failure to follow proper procedures when selling tenant-occupied property in Arizona can result in legal disputes, delayed sales, and potential financial penalties. Always ensure you're complying with Arizona's specific tenant notification requirements and respecting lease terms throughout the sales process.
Key Considerations
Scenarios
Decisions
Scenarios
Decisions
Scenarios
Decisions
Relevant Documents
Assignment of Leases
A legal document that transfers the landlord's rights and obligations under existing lease agreements to the new property owner, ensuring continuity of the tenancy terms.
Cash for Keys Agreement
A document that formalizes an arrangement where the property owner offers financial incentive to tenants to vacate the property voluntarily before the sale or closing date.
Early Lease Termination Agreement
If the seller and tenants mutually agree to end the lease early before the sale, this document outlines the terms of that agreement, including any compensation or notice periods.
Estoppel Certificate
A document signed by tenants confirming the terms of their lease, current rent amount, security deposit held, and that the landlord is not in default. This provides assurance to potential buyers about the status of existing tenancies.
Notice to Tenants of Intent to Sell
A formal written notice informing tenants of the property owner's intention to sell the property. This document helps establish clear communication and may be required by law in many jurisdictions.
Property Disclosure Statement
A document where the seller discloses known material defects and other important information about the property, including the presence of tenants and the terms of their occupancy.
Real Estate Purchase Agreement
The contract between seller and buyer that should specifically address the existence of tenants, the status of their leases, and how those leases will be handled during and after the sale.
Rent Roll
A document that lists all rental units, current tenants, lease terms, monthly rent amounts, security deposits, and payment histories. This provides potential buyers with a clear picture of the property's rental income.
Security Deposit Transfer Agreement
A document that formalizes the transfer of tenant security deposits from the seller to the buyer, including accounting for all deposits and accrued interest where applicable.
Relevant Laws
Arizona Residential Landlord and Tenant Act (A.R.S. § 33-1301 et seq.)
This is the primary law governing landlord-tenant relationships in Arizona. When selling a property with tenants, the new owner generally must honor existing lease agreements. The Act specifies that a change in ownership does not terminate an existing lease, and the new owner steps into the shoes of the previous landlord with all the same obligations and rights.
Notice Requirements for Entry (A.R.S. § 33-1343)
When showing a property to prospective buyers, landlords must provide at least two days' notice before entering the property. This law is relevant when selling a tenant-occupied property as it governs how and when the property can be shown to potential buyers.
Termination of Month-to-Month Tenancies (A.R.S. § 33-1375)
For month-to-month tenancies, Arizona law requires landlords to provide at least 30 days' notice to terminate the tenancy. This is relevant when selling a property and the buyer wants vacant possession, but only applies to month-to-month arrangements, not fixed-term leases.
Security Deposit Transfer (A.R.S. § 33-1321)
When selling a property, the seller must transfer all security deposits to the new owner or return them to tenants. The new owner becomes responsible for the security deposits and must comply with all requirements regarding their handling and return.
Disclosure of Sale to Tenants (A.R.S. § 33-1331)
Arizona law requires landlords to disclose the name and address of the property manager and owner to tenants. When ownership changes, the new owner must provide this information to existing tenants, typically within a reasonable time after the sale.
Regional Variances
Major Metropolitan Areas
Phoenix has additional tenant protections that landlords must follow when selling a tenant-occupied property. The Phoenix Neighborhood Services Department requires landlords to provide tenants with a minimum 60-day written notice (instead of the state minimum 30 days) before terminating a month-to-month tenancy due to property sale. Additionally, Phoenix has specific requirements for property showings, limiting them to reasonable hours and requiring 48-hour advance notice.
Tucson has enacted stronger tenant protection ordinances than state law. The Tucson Tenant Protection Ordinance requires landlords selling properties to provide tenants with at least 60 days' notice before terminating a lease due to sale. Tucson also has a Tenant Relocation Assistance Program that may require sellers to provide financial assistance to displaced tenants in certain circumstances, particularly for lower-income renters.
Tempe has additional disclosure requirements for landlords selling tenant-occupied properties. Sellers must disclose to potential buyers all current lease terms and tenant rights. Tempe also enforces stricter penalties for landlords who attempt to force tenants out through constructive eviction tactics during the sales process.
Tourist and Retirement Communities
Scottsdale has specific ordinances addressing luxury rental properties and vacation rentals. When selling properties with short-term rental licenses, additional documentation and transfer procedures apply. Scottsdale also has enhanced tenant privacy protections during property showings, requiring 72-hour advance notice and limiting showing hours to between 9am and 7pm.
Sedona has unique regulations regarding the sale of properties in designated tourist zones. Due to the high number of vacation rentals, sellers must provide additional documentation regarding any existing rental agreements. The city also requires disclosure of any pending tourist accommodation permits or licenses when selling tenant-occupied properties.
This retirement community has age-restricted housing covenants that affect the sale of tenant-occupied properties. When selling a property in Sun City, landlords must ensure that both current tenants and potential buyers meet the 55+ age requirements. The Sun City Homeowners Association also has specific rules regarding tenant notifications during property sales.
Border and Rural Communities
Yuma County has specific regulations for agricultural worker housing. When selling properties with agricultural worker tenants, additional notice requirements apply, and sellers may need to coordinate with the Arizona Department of Agriculture. Seasonal rental agreements common in this region have different termination requirements during property sales.
Flagstaff has enacted a Tenant Protection Ordinance that provides additional rights to tenants during property sales. The ordinance requires landlords to give tenants the right of first refusal when selling a property. Additionally, due to Flagstaff's university population, there are special provisions for student housing that affect the timing of property sales relative to academic calendars.
This border county has specific regulations regarding the sale of rental properties in designated border zones. Additional documentation and verification may be required when selling tenant-occupied properties. The county also has special provisions for military personnel tenants from nearby Fort Huachuca, providing them with additional protections during property sales.
Suggested Compliance Checklist
Review Lease Agreement
1 days after startingCarefully review all lease agreements with current tenants to understand your obligations and restrictions. Pay special attention to lease terms, expiration dates, renewal options, and any clauses related to property sale. Arizona law requires honoring existing lease terms even after property sale, so understanding these agreements is crucial.
Prepare Notice to Tenants of Intent to Sell
3 days after startingWhile Arizona law doesn't specifically require notifying tenants of your intent to sell, providing written notice is a professional courtesy and helps maintain good relations. This notice should inform tenants of the upcoming sale, potential showings, and reassure them about their rights under existing lease agreements. Under A.R.S. § 33-1343, landlords must provide reasonable notice (at least 2 days) before entering the property for showings.
Complete Property Disclosure Statement
7 days after startingArizona law requires sellers to disclose all known material facts about the property's condition. When tenants occupy the property, you must include information about existing tenancies, any property issues reported by tenants, and maintenance history. This disclosure protects you from future liability and provides transparency to potential buyers.
Request Estoppel Certificate from Tenants
10 days after startingAn estoppel certificate confirms the terms of the lease, current rent amount, security deposit held, and that the tenant has no claims against the landlord. While not legally required in Arizona, this document protects both seller and buyer by documenting the tenant's acknowledgment of lease terms and preventing future disputes. Request this from each tenant before listing the property.
Prepare Rent Roll
12 days after startingCreate a comprehensive rent roll documenting all current tenancies, including tenant names, unit numbers, lease start/end dates, monthly rent amounts, security deposits held, and payment history. This document is essential for potential buyers to understand the rental income and tenant situation. Arizona law requires accurate accounting of all security deposits (A.R.S. § 33-1321).
Determine Selling Strategy
14 days after startingDecide whether to sell the property with tenants in place or vacant. In Arizona, you have several options: 1) Sell with tenants and transfer the leases (simplest approach), 2) Wait for leases to expire naturally, 3) Negotiate early termination with tenants, or 4) Offer 'cash for keys' to incentivize moving. This decision affects your timeline, legal obligations, and potentially your sale price.
Prepare Real Estate Purchase Agreement
21 days after startingWork with a real estate agent or attorney to draft a purchase agreement that specifically addresses the property's tenant-occupied status. The agreement should clearly state whether the property is being sold with tenants in place and include contingencies related to tenant cooperation. In Arizona, the standard AAR (Arizona Association of REALTORS®) purchase contract can be modified to address tenant-specific concerns.
Prepare Assignment of Leases
25 days after startingIf selling with tenants in place, draft an assignment of leases document that transfers all landlord rights and obligations to the new owner. This document should list all current leases being transferred and confirm that security deposits will be transferred at closing. Under Arizona law (A.R.S. § 33-1321(D)), the new owner assumes responsibility for security deposits upon transfer.
Draft Security Deposit Transfer Agreement
28 days after startingCreate a document detailing all security deposits being transferred to the new owner. Arizona law (A.R.S. § 33-1321) requires landlords to maintain detailed records of security deposits and transfer them to the new owner upon sale. The agreement should include deposit amounts, dates collected, any deductions made, and current balance for each tenant.
Consider Early Lease Termination Options
30 days after startingIf you prefer to sell the property vacant, review Arizona law regarding early lease termination. In Arizona, you cannot unilaterally terminate a lease simply because you want to sell. You must either wait for leases to expire naturally or negotiate with tenants. If pursuing early termination, prepare appropriate documentation that complies with Arizona law and protects you from future claims.
Prepare Early Lease Termination Agreement (if applicable)
35 days after startingIf tenants agree to terminate their lease early, draft a formal agreement documenting the terms. This should include the agreed-upon move-out date, any financial compensation, handling of security deposits, and mutual release of future obligations. Arizona law doesn't specify requirements for mutual termination agreements, but having clear written documentation protects all parties.
Consider Cash for Keys Agreement (if applicable)
40 days after startingIf offering financial incentives for tenants to vacate early, draft a 'cash for keys' agreement. This document should clearly state the amount being offered, required move-out condition, deadline for vacating, and release of future lease obligations. While not specifically addressed in Arizona statutes, this approach must still respect tenants' rights under their existing lease and Arizona landlord-tenant law.
Schedule and Coordinate Property Showings
45 days after startingWhen showing a tenant-occupied property, Arizona law (A.R.S. § 33-1343) requires providing at least two days' notice before entry. Coordinate showing times with tenants, respect their privacy, and ensure all showings comply with legal notice requirements. Consider creating a showing schedule that minimizes disruption to tenants while maximizing exposure to potential buyers.
Notify Tenants of New Ownership
60 days after startingOnce the sale is complete, ensure tenants are properly notified of the new ownership. Arizona law requires that tenants be informed where and to whom rent should be paid. This notification should include the new owner's name, address, phone number, and instructions for future rent payments and maintenance requests.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Review Lease Agreement | Carefully review all lease agreements with current tenants to understand your obligations and restrictions. Pay special attention to lease terms, expiration dates, renewal options, and any clauses related to property sale. Arizona law requires honoring existing lease terms even after property sale, so understanding these agreements is crucial. | - | 1 |
| Prepare Notice to Tenants of Intent to Sell | While Arizona law doesn't specifically require notifying tenants of your intent to sell, providing written notice is a professional courtesy and helps maintain good relations. This notice should inform tenants of the upcoming sale, potential showings, and reassure them about their rights under existing lease agreements. Under A.R.S. § 33-1343, landlords must provide reasonable notice (at least 2 days) before entering the property for showings. | Notice to Tenants of Intent to Sell | 3 |
| Complete Property Disclosure Statement | Arizona law requires sellers to disclose all known material facts about the property's condition. When tenants occupy the property, you must include information about existing tenancies, any property issues reported by tenants, and maintenance history. This disclosure protects you from future liability and provides transparency to potential buyers. | Property Disclosure Statement | 7 |
| Request Estoppel Certificate from Tenants | An estoppel certificate confirms the terms of the lease, current rent amount, security deposit held, and that the tenant has no claims against the landlord. While not legally required in Arizona, this document protects both seller and buyer by documenting the tenant's acknowledgment of lease terms and preventing future disputes. Request this from each tenant before listing the property. | Estoppel Certificate | 10 |
| Prepare Rent Roll | Create a comprehensive rent roll documenting all current tenancies, including tenant names, unit numbers, lease start/end dates, monthly rent amounts, security deposits held, and payment history. This document is essential for potential buyers to understand the rental income and tenant situation. Arizona law requires accurate accounting of all security deposits (A.R.S. § 33-1321). | Rent Roll | 12 |
| Determine Selling Strategy | Decide whether to sell the property with tenants in place or vacant. In Arizona, you have several options: 1) Sell with tenants and transfer the leases (simplest approach), 2) Wait for leases to expire naturally, 3) Negotiate early termination with tenants, or 4) Offer 'cash for keys' to incentivize moving. This decision affects your timeline, legal obligations, and potentially your sale price. | - | 14 |
| Prepare Real Estate Purchase Agreement | Work with a real estate agent or attorney to draft a purchase agreement that specifically addresses the property's tenant-occupied status. The agreement should clearly state whether the property is being sold with tenants in place and include contingencies related to tenant cooperation. In Arizona, the standard AAR (Arizona Association of REALTORS®) purchase contract can be modified to address tenant-specific concerns. | Real Estate Purchase Agreement | 21 |
| Prepare Assignment of Leases | If selling with tenants in place, draft an assignment of leases document that transfers all landlord rights and obligations to the new owner. This document should list all current leases being transferred and confirm that security deposits will be transferred at closing. Under Arizona law (A.R.S. § 33-1321(D)), the new owner assumes responsibility for security deposits upon transfer. | Assignment of Leases | 25 |
| Draft Security Deposit Transfer Agreement | Create a document detailing all security deposits being transferred to the new owner. Arizona law (A.R.S. § 33-1321) requires landlords to maintain detailed records of security deposits and transfer them to the new owner upon sale. The agreement should include deposit amounts, dates collected, any deductions made, and current balance for each tenant. | Security Deposit Transfer Agreement | 28 |
| Consider Early Lease Termination Options | If you prefer to sell the property vacant, review Arizona law regarding early lease termination. In Arizona, you cannot unilaterally terminate a lease simply because you want to sell. You must either wait for leases to expire naturally or negotiate with tenants. If pursuing early termination, prepare appropriate documentation that complies with Arizona law and protects you from future claims. | - | 30 |
| Prepare Early Lease Termination Agreement (if applicable) | If tenants agree to terminate their lease early, draft a formal agreement documenting the terms. This should include the agreed-upon move-out date, any financial compensation, handling of security deposits, and mutual release of future obligations. Arizona law doesn't specify requirements for mutual termination agreements, but having clear written documentation protects all parties. | Early Lease Termination Agreement | 35 |
| Consider Cash for Keys Agreement (if applicable) | If offering financial incentives for tenants to vacate early, draft a 'cash for keys' agreement. This document should clearly state the amount being offered, required move-out condition, deadline for vacating, and release of future lease obligations. While not specifically addressed in Arizona statutes, this approach must still respect tenants' rights under their existing lease and Arizona landlord-tenant law. | Cash for Keys Agreement | 40 |
| Schedule and Coordinate Property Showings | When showing a tenant-occupied property, Arizona law (A.R.S. § 33-1343) requires providing at least two days' notice before entry. Coordinate showing times with tenants, respect their privacy, and ensure all showings comply with legal notice requirements. Consider creating a showing schedule that minimizes disruption to tenants while maximizing exposure to potential buyers. | - | 45 |
| Notify Tenants of New Ownership | Once the sale is complete, ensure tenants are properly notified of the new ownership. Arizona law requires that tenants be informed where and to whom rent should be paid. This notification should include the new owner's name, address, phone number, and instructions for future rent payments and maintenance requests. | - | 60 |
Frequently Asked Questions
Yes, you can sell your rental property in Arizona with tenants still occupying it. The lease agreement transfers to the new owner, and tenants retain their rights under the existing lease terms. The Arizona Residential Landlord and Tenant Act protects tenants' rights to remain in the property until their lease expires, regardless of ownership changes.
While Arizona law doesn't specifically require you to notify tenants of your intent to sell, it's considered best practice to provide written notice. You must, however, give proper notice (typically 48 hours) before showing the property to potential buyers, as required by Arizona's landlord-tenant laws regarding entry to the premises. Clear communication can help maintain a positive relationship with tenants during the sales process.
Generally, no. In Arizona, you cannot unilaterally terminate a fixed-term lease simply because you want to sell the property. The lease is a binding contract that survives the sale. If you need vacant possession before selling, you have several options: wait until the lease naturally expires, negotiate a voluntary early termination with compensation to the tenant, or sell to a buyer who is willing to purchase with tenants in place.
When selling a rental property in Arizona, you must either transfer the security deposit to the new owner or return it to the tenant. If transferred, you must notify tenants in writing about the transfer, including the new owner's name and contact information. The new owner becomes responsible for the security deposit and must honor the terms under which it was originally collected. This transfer should be clearly documented in your sales agreement.
Yes, you can show your occupied rental property to potential buyers, but you must follow Arizona's rules for landlord entry. This requires providing tenants with at least 48 hours' notice before each showing and entering only at reasonable times. The notice should be written and specify the date, time, and purpose of entry. Tenants cannot unreasonably deny access for showings, but their privacy rights must be respected throughout the process.
If a tenant unreasonably refuses to allow showings despite proper notice, this could constitute a violation of Arizona's landlord-tenant law, which requires tenants to allow reasonable access for showings when proper notice is given. You may want to first attempt to resolve the issue through communication, perhaps by offering flexible showing schedules or small incentives. If the tenant continues to refuse reasonable access, you may have grounds to pursue legal remedies, including potentially filing for an eviction based on lease violation, though this should be a last resort.
Yes, you can offer your tenants a 'cash for keys' agreement to incentivize them to vacate the property early. This is a legal and often effective strategy in Arizona. The agreement should be in writing and specify the amount offered, the move-out date, the condition the property should be left in, and that the tenant is voluntarily surrendering their lease rights. This approach can be less expensive and time-consuming than potential legal proceedings if you need vacant possession for the sale.
Yes, you must disclose to potential buyers that the property is tenant-occupied and provide details about the existing lease terms. In Arizona, sellers have a duty to disclose material facts that could affect the value or desirability of the property. The existence of a lease is considered material information. You should provide potential buyers with copies of the lease agreement (with personal tenant information redacted if necessary) and information about security deposits, rental payment history, and any ongoing maintenance issues.
If your tenant's lease expires during the selling process in Arizona, you have several options. You can offer to renew the lease (which may make the property less attractive to buyers wanting vacant possession), convert to a month-to-month tenancy (providing more flexibility), or give proper notice of non-renewal (30 days for month-to-month leases). If the tenant remains on a month-to-month basis, the new owner would have the same options after purchasing the property, including the right to terminate the tenancy with proper notice.
The new owner cannot immediately evict tenants simply because of the change in ownership. They must honor the existing lease until it expires. After purchasing a tenant-occupied property in Arizona, the new owner steps into your shoes as the landlord and inherits all the rights and responsibilities under the existing lease. They can only terminate tenancies through legal means, such as non-renewal of a lease with proper notice, eviction for lease violations, or negotiated early termination agreements with tenants.