Selling a House with Renters in Minnesota: 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, and any clauses that might affect your ability to sell the property. Minnesota law requires that existing leases be honored by new owners, so these agreements will transfer with the property.

Research Minnesota-specific tenant protections. In Minnesota, tenants with a fixed-term lease generally have the right to stay until the lease expires, even if the property is sold. Month-to-month tenants must receive proper notice (typically 30 days in Minnesota) before being required to vacate. Some municipalities like Minneapolis and St. Paul may have additional tenant protections or notice requirements.

While not legally required in Minnesota, it's good practice to formally notify tenants of your intent to sell. This document should inform tenants that the property will be listed for sale, explain how showings will be handled, and reassure them about their rights. Minnesota law requires reasonable notice (usually 24 hours) before entering a tenant's unit for showings.

Minnesota law (Minnesota Statutes § 513.55) requires sellers to disclose all material facts that could adversely affect the property's value. This includes disclosing information about the property's condition, any known defects, environmental issues, and other relevant information. The disclosure must be made in good faith and before signing a purchase agreement.

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 required by Minnesota law, this document protects both the seller and buyer by documenting the current status of the tenancy. Request this from each tenant to provide to potential buyers.

Create a comprehensive rent roll that includes details about each unit, current tenants, 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.

If you prefer to sell the property vacant, evaluate legal options. For month-to-month tenants, you can provide proper notice to terminate (typically 30 days in Minnesota). For fixed-term leases, options include waiting until leases expire, negotiating early termination, or selling with tenants in place. Remember that in Minnesota, you cannot evict tenants simply because you want to sell the property.

If you and your tenants agree to end a lease early, document this agreement. Include the agreed-upon move-out date, any financial compensation, handling of security deposits, and release of future obligations. This agreement must be voluntary on the tenant's part - Minnesota law does not allow forced early termination solely for property sale.

If you want vacant possession and tenants have the right to stay, consider offering financial incentives for voluntary move-out. This document should clearly state the amount offered, move-out date, property condition requirements, and that the agreement is voluntary. The amount should be reasonable considering moving costs, rental market conditions, and inconvenience to the tenant.

Work with a real estate 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, how security deposits will be handled, and include copies of all lease agreements. Minnesota law requires the seller to transfer all security deposits to the new owner.

Minnesota law (Minnesota Statutes § 504B.178) requires that security deposits be transferred to the new owner. This document should detail all security deposits being transferred, confirm that deposits are held in compliance with Minnesota law (which prohibits commingling with personal funds), and release you from liability once the transfer is complete.

This document formally transfers all lease agreements to the new owner. It should list all current leases, affirm they are in good standing, and state that all rights and obligations under the leases will transfer to the buyer at closing. Minnesota law automatically binds new owners to existing leases, but this document clarifies the specific agreements being transferred.

Once the sale is finalized, Minnesota law requires that tenants be notified of the new owner's name and address where rent should be paid. This notice should also explain how security deposits have been transferred and provide contact information for the new owner or property manager.

If your property is in Minneapolis or St. Paul, check for additional local ordinances. For example, Minneapolis has a Tenant Protection Ordinance with additional notice requirements, and St. Paul has Just Cause Eviction requirements that may affect your sale process. Local regulations may be more restrictive than state law.