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

Carefully review all current lease agreements to understand tenant rights, lease terms, and any provisions related to property sale. Pay special attention to lease duration, renewal options, early termination clauses, and any right of first refusal that may have been granted to tenants. Colorado law requires honoring existing leases even after property sale.

While Colorado 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 your plans to sell, reassure them about their lease rights, and explain the showing process. Include information about how showings will be conducted and the notice period tenants will receive before showings (Colorado requires reasonable notice, typically 24-48 hours).

Colorado law (Colorado Revised Statutes § 38-35.7-101) requires sellers to disclose known material defects about the property. When tenants occupy the property, be sure to include any maintenance issues they've reported. This disclosure must be provided to potential buyers before they make an offer. If you're unaware of certain conditions because tenants have exclusive access to the property, note this limitation in your disclosure.

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 Colorado, this document protects both 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 5-10 business days).

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. Colorado law requires accurate accounting of all tenant funds held.

Decide whether to sell with tenants in place or with vacant possession. In Colorado, if you choose to terminate month-to-month tenancies, you must provide at least 21 days' notice for tenancies less than 6 months, and 91 days' notice for tenancies of at least 6 months but less than 12 months, and 91 days' notice for tenancies of 12 months or longer (per Colorado Revised Statutes § 13-40-107). Fixed-term leases cannot be terminated early solely due to sale unless the lease specifically allows it.

If you prefer to sell the property vacant and tenants have fixed-term leases, consider offering financial incentives for voluntary early termination. This 'cash for keys' approach must be entirely voluntary on the tenant's part. The agreement should clearly state the move-out date, amount offered, condition requirements for the property, and that this agreement supersedes the original lease terms regarding termination.

If tenants agree to terminate their lease early without a cash incentive, document this agreement formally. The agreement should include the agreed move-out date, any modifications to the security deposit return process, and mutual release of further obligations under the original lease. Both parties must sign this document for it to be valid in Colorado.

When showing an occupied rental property in Colorado, landlords must provide reasonable notice to tenants (typically 24-48 hours). Schedule showings at reasonable times and be respectful of tenants' privacy and schedules. Consider creating a showing schedule that minimizes disruption to tenants' lives. Document all communications about showings in case of disputes.

When drafting or reviewing the purchase agreement, ensure it addresses the existence of tenants. The agreement should specify whether the property is being sold subject to existing leases, include copies of all current leases, and address security deposit transfers. In Colorado, the purchase agreement should acknowledge that leases survive the sale unless otherwise specified.

This document formally transfers all landlord rights and obligations under existing leases to the new owner. It should list all current leases being assigned, affirm that these leases are in good standing, and state the effective date of transfer (typically the closing date). Colorado law requires that tenants be notified of any change in ownership or management.

Colorado law (Colorado Revised Statutes § 38-12-103) requires landlords to transfer all security deposits to the new owner or return them to tenants upon property sale. This agreement documents the transfer of all security deposits to the buyer, including amounts, tenant names, and original deposit dates. The agreement should acknowledge the buyer's assumption of all obligations related to these deposits.

After closing, Colorado law requires that tenants be notified of the change in ownership and provided with the new owner's name, address, and phone number for payment of rent and maintenance requests. While this is technically the new owner's responsibility, coordinating this communication helps ensure a smooth transition for all parties.

Update property ownership records with the county assessor's office and any local rental licensing authorities. Colorado municipalities have different requirements for rental properties, so check local regulations. For example, Denver requires rental properties to be licensed and ownership changes must be reported.