Selling a House with Renters in Arkansas: What Landlords Need to Know

Carefully review all lease agreements with current tenants to understand your obligations and rights. Pay special attention to lease terms, expiration dates, renewal options, and any clauses related to property sale. Arkansas law requires landlords to honor existing leases even when the property is sold, so understanding these agreements is crucial.

While Arkansas 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 document should inform tenants of your plans to sell, reassure them about their lease rights, and explain how showings will be conducted. Arkansas requires reasonable notice (typically 24 hours) before entering a tenant's unit.

Arkansas law (Arkansas Code § 18-12-801 through 807) requires sellers to disclose known material defects in the property. Complete this form honestly, including any issues that might affect the property's value or desirability. Failure to disclose known defects could result in legal liability.

An estoppel certificate confirms the terms of the lease agreement and that tenants acknowledge their obligations. This document protects both the seller and buyer by preventing tenants from later claiming different lease terms. Request this from each tenant, giving them reasonable time to complete it (typically 10 days in Arkansas).

Create a comprehensive rent roll documenting all current tenants, their lease terms, monthly rent amounts, security deposits held, and payment history. This document is essential for potential buyers to understand the rental income and tenant situation. Be accurate, as misrepresentations could lead to legal issues after the sale.

Decide whether to sell with tenants in place or vacant property. If seeking vacant property, you must either wait for leases to expire naturally or negotiate early termination. In Arkansas, you cannot simply terminate month-to-month tenancies because you want to sell; you must still provide proper notice (typically 30 days in writing).

If you decide to sell the property vacant and tenants have time remaining on their leases, you'll need to negotiate early termination. This agreement should outline any compensation offered, return of security deposits, move-out timeline, and release of future obligations. Remember that in Arkansas, tenants are not legally obligated to accept early termination, so this requires mutual agreement.

If offering financial incentives for tenants to vacate early, document the terms in a Cash for Keys Agreement. Specify the amount offered, condition requirements for the property upon vacancy, key return process, and payment timing. This agreement should be signed by all parties and can help avoid eviction proceedings, which in Arkansas can take 3-4 weeks even under ideal circumstances.

Work with a real estate agent or attorney to prepare a purchase agreement that addresses the presence of tenants. The agreement should specify whether the property is being sold with tenants in place and include contingencies related to tenant occupancy. In Arkansas, be sure to comply with the Arkansas Real Estate Commission's requirements for property sales.

If selling with tenants in place, draft an assignment of leases to transfer all landlord rights and obligations to the new owner. This document should list all active leases being transferred and confirm that security deposits will also transfer. Under Arkansas law, the new owner assumes all landlord responsibilities once the property transfers.

Create a document detailing all security deposits being transferred to the new owner. Arkansas law (A.C.A. § 18-16-305) requires landlords to return deposits within 60 days of lease termination, so proper documentation of deposit transfers is essential to avoid double liability. Include deposit amounts, tenant names, and acknowledgment from the buyer of receiving these funds.

Schedule and coordinate property showings with current tenants. Arkansas law requires landlords to provide reasonable notice before entering (typically 24 hours). Document all communications about showings. Failure to provide proper notice could constitute harassment or violation of the tenant's right to quiet enjoyment.

Review Arkansas landlord-tenant laws to ensure full compliance during the sale process. Arkansas is unique in that it's the only state that doesn't imply a warranty of habitability in residential leases, but landlords still have obligations regarding security deposits, eviction procedures, and retaliation prohibitions. Consult with a local attorney if you have specific concerns.

At closing, execute the Assignment of Leases and Security Deposit Transfer Agreement. Provide the new owner with all tenant contact information, copies of leases, and maintenance records. In Arkansas, notify tenants in writing of the new ownership and where to send future rent payments. This notification should occur immediately after closing.