Selling a House with Renters in North Dakota: What Landlords Need to Know
Selling a property with existing tenants in North Dakota requires careful navigation of both landlord-tenant law and real estate regulations. North Dakota landlords must honor existing lease agreements when selling rental property, though they have options including selling with tenants in place, waiting until lease expiration, or negotiating early termination with proper notice.
Failure to follow proper procedures when selling tenant-occupied property in North Dakota could result in legal disputes, financial penalties, and potential delays in your property sale. Always provide proper written notice according to North Dakota Century Code and consider consulting with a real estate attorney familiar with North Dakota landlord-tenant law.
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
North Dakota Century Code § 47-16-07 - Notice of Termination of Lease
This law establishes the notice requirements for terminating a lease in North Dakota. For month-to-month tenancies, landlords must provide at least 30 days' written notice before terminating the lease. When selling a property with tenants, this notice requirement must be followed unless the lease specifies otherwise.
North Dakota Century Code § 47-16-15 - Termination of Lease
This statute outlines how leases may be terminated in North Dakota. When selling a property with tenants who have a fixed-term lease, the new owner generally must honor the existing lease terms until expiration. The lease doesn't automatically terminate upon sale of the property.
North Dakota Century Code § 47-16-07.2 - Eviction
This law details the legal process for eviction in North Dakota. A property owner cannot simply evict tenants because they want to sell the property. Proper legal grounds for eviction must exist, such as lease violations or non-payment of rent, and the formal eviction process must be followed.
North Dakota Century Code § 47-16-13.1 - Security Deposits
When selling a property with tenants, this law is relevant because it governs how security deposits must be handled. The seller (current landlord) must either transfer the security deposits to the new owner or return them to the tenants. The new owner becomes responsible for the security deposits if they are transferred.
North Dakota Century Code § 47-16-31 - Landlord's Duty to Disclose
This statute requires landlords to disclose the names and addresses of persons authorized to manage the property. When selling a rental property, the new owner must provide this information to tenants, including where rent should be paid and who is responsible for maintenance and repairs.
Regional Variances
Major Cities in North Dakota
Fargo follows North Dakota state law regarding selling tenant-occupied properties. However, the city has a more active rental market due to being the largest city in the state and home to North Dakota State University. Landlords selling properties in Fargo should be particularly mindful of student housing leases, which often align with academic calendars. The Fargo Housing Authority may also be involved if the property participates in any affordable housing programs.
As the state capital, Bismarck strictly adheres to North Dakota's landlord-tenant laws. The Bismarck City Commission occasionally reviews rental property ordinances, so sellers should check for any recent local amendments. Bismarck has a more stable, year-round rental market compared to university towns, which may affect timing considerations when selling tenant-occupied properties.
Grand Forks, home to the University of North Dakota, has a significant student rental market. The city has experienced housing challenges following historic floods, resulting in some neighborhoods having specific zoning or flood protection requirements that may impact property sales. Sellers should verify if their rental property falls within any special districts that might have additional regulations.
Minot has experienced housing market fluctuations due to its proximity to Minot Air Force Base and the oil industry in western North Dakota. These economic factors can affect rental property values and tenant stability. Sellers should be aware that Minot may have a higher percentage of month-to-month leases due to the transient nature of military and oil field workers, potentially making it easier to sell properties without long-term tenant commitments.
Rural Counties in North Dakota
Williams County, centered around Williston, has been heavily impacted by oil boom and bust cycles. The rental market here can be volatile, with periods of extremely high demand followed by vacancies. Sellers of tenant-occupied properties should be aware that local economic conditions may significantly impact both property values and the ability to maintain tenants during the sale process. The county may have specific ordinances related to workforce housing that differ from other parts of the state.
Stark County, including Dickinson, has a mix of agricultural and energy industry influences on its housing market. The county follows state landlord-tenant laws but may have local ordinances related to property maintenance and inspections that sellers need to address before transferring ownership of tenant-occupied properties. The rental market tends to be more stable than in some oil-impacted counties.
Burleigh County, which includes portions of Bismarck, generally follows state laws regarding tenant rights during property sales. However, the county may have specific rural property regulations that differ from city ordinances, particularly for properties outside city limits. Sellers should verify zoning and land use requirements, especially for larger rural rental properties or those with agricultural components.
Suggested Compliance Checklist
Review Lease Agreement
1 days after startingCarefully 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. In North Dakota, written leases are binding contracts that will transfer to the new owner unless otherwise specified.
Determine Tenant Rights Under North Dakota Law
3 days after startingResearch North Dakota tenant laws (North Dakota Century Code Chapter 47-16) to understand tenant rights during property sales. In North Dakota, tenants with a valid lease generally have the right to remain in the property until the lease expires, even when ownership changes. Month-to-month tenants must receive proper notice (30 days) before being required to vacate.
Prepare Notice to Tenants of Intent to Sell
5 days after startingWhile not legally required in North Dakota, it's good practice to formally notify tenants of your intent to sell. This document should inform tenants about the upcoming sale, explain how showings will be handled, and reassure them about their rights. Include information about how their security deposits and leases will be handled during the transition.
Create Property Disclosure Statement
7 days after startingNorth Dakota law (N.D.C.C. § 47-10-02.1) requires sellers to disclose known material facts about the property's condition. This includes any issues that might affect the property's value or desirability. Be sure to include information about the rental units, any maintenance issues, and the condition of systems and structures.
Coordinate Property Showings in Compliance with Tenant Rights
10 days after startingIn North Dakota, landlords must provide reasonable notice (typically 24 hours) before entering a tenant's unit, including for showings. Create a schedule and system for notifying tenants about showings that respects their rights while facilitating the sale process. Document all communications regarding entry notices.
Request Estoppel Certificate from Tenants
14 days after startingAsk tenants to complete an estoppel certificate that verifies the terms of their lease, current rent amount, security deposit held, and confirms they have no claims against the landlord. This document protects both the seller and buyer by documenting the current status of the tenancy. While not required by North Dakota law, it's a standard practice in real estate transactions involving tenants.
Prepare Rent Roll
16 days after startingCreate a comprehensive rent roll document that lists all units, current tenants, lease terms, monthly rent amounts, security deposits held, and payment histories. This document will be essential for the buyer's due diligence and for calculating prorations at closing.
Consider Options for Vacant Possession
20 days after startingIf you prefer to sell the property vacant, evaluate legal options for ending tenancies. For month-to-month tenants, provide the required 30-day notice. For fixed-term leases, you may need to wait until lease expiration or consider offering incentives for early termination. Remember that in North Dakota, you cannot force tenants with valid leases to leave simply because you're selling.
Draft Early Lease Termination Agreement (If Applicable)
25 days after startingIf tenants are willing to vacate before their lease ends, create a formal agreement that outlines the terms of early termination. Include the move-out date, any financial incentives offered, conditions for returning security deposits, and releases from future obligations. Both parties should sign this document to make it legally binding.
Prepare Cash for Keys Agreement (If Applicable)
28 days after startingIf offering financial incentives for tenants to vacate, draft a formal 'Cash for Keys' agreement. This document should clearly state the amount being offered, the required move-out date and condition, and that payment will be made only after the tenant has fully vacated and returned the keys. This can be a useful tool when you need vacant possession but tenants have legal rights to stay.
Draft Real Estate Purchase Agreement with Tenant Provisions
30 days after startingWork with a real estate attorney to create a purchase agreement that addresses the presence of tenants. Include provisions about the transfer of security deposits, assignment of leases, tenant estoppel certificates, and whether the property will be delivered vacant or with tenants in place. In North Dakota, be sure to comply with N.D.C.C. § 47-16-07.1 regarding security deposit transfers.
Prepare Assignment of Leases
32 days after startingDraft a document that formally transfers all lease agreements from you to the buyer at closing. This document should list all current leases being transferred and affirm that these are valid, binding agreements. It should also state that the buyer assumes all landlord obligations under these leases after the closing date.
Create Security Deposit Transfer Agreement
34 days after startingNorth Dakota law (N.D.C.C. § 47-16-07.1) requires landlords to transfer security deposits to the new owner or return them to tenants when selling property. Draft an agreement that documents the transfer of all security deposits to the buyer, including the amount for each unit. This protects you from liability for these funds after the sale.
Notify Tenants of New Ownership
40 days after startingAfter closing, provide tenants with written notice of the property's new ownership. Include the new owner's name, address, and contact information for rent payments and maintenance requests. While not explicitly required by North Dakota law, this communication is essential for a smooth transition and helps fulfill your duty to tenants.
Complete Final Accounting with Tenants
42 days after startingIf you've collected any rent in advance for periods after the sale, ensure these amounts are properly prorated and credited to the buyer at closing. Document all financial transactions related to the tenancies to avoid disputes after the sale is complete.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Review Lease Agreement | 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. In North Dakota, written leases are binding contracts that will transfer to the new owner unless otherwise specified. | - | 1 |
| Determine Tenant Rights Under North Dakota Law | Research North Dakota tenant laws (North Dakota Century Code Chapter 47-16) to understand tenant rights during property sales. In North Dakota, tenants with a valid lease generally have the right to remain in the property until the lease expires, even when ownership changes. Month-to-month tenants must receive proper notice (30 days) before being required to vacate. | - | 3 |
| Prepare Notice to Tenants of Intent to Sell | While not legally required in North Dakota, it's good practice to formally notify tenants of your intent to sell. This document should inform tenants about the upcoming sale, explain how showings will be handled, and reassure them about their rights. Include information about how their security deposits and leases will be handled during the transition. | Notice to Tenants of Intent to Sell | 5 |
| Create Property Disclosure Statement | North Dakota law (N.D.C.C. § 47-10-02.1) requires sellers to disclose known material facts about the property's condition. This includes any issues that might affect the property's value or desirability. Be sure to include information about the rental units, any maintenance issues, and the condition of systems and structures. | Property Disclosure Statement | 7 |
| Coordinate Property Showings in Compliance with Tenant Rights | In North Dakota, landlords must provide reasonable notice (typically 24 hours) before entering a tenant's unit, including for showings. Create a schedule and system for notifying tenants about showings that respects their rights while facilitating the sale process. Document all communications regarding entry notices. | - | 10 |
| Request Estoppel Certificate from Tenants | Ask tenants to complete an estoppel certificate that verifies the terms of their lease, current rent amount, security deposit held, and confirms they have no claims against the landlord. This document protects both the seller and buyer by documenting the current status of the tenancy. While not required by North Dakota law, it's a standard practice in real estate transactions involving tenants. | Estoppel Certificate | 14 |
| Prepare Rent Roll | Create a comprehensive rent roll document that lists all units, current tenants, lease terms, monthly rent amounts, security deposits held, and payment histories. This document will be essential for the buyer's due diligence and for calculating prorations at closing. | Rent Roll | 16 |
| Consider Options for Vacant Possession | If you prefer to sell the property vacant, evaluate legal options for ending tenancies. For month-to-month tenants, provide the required 30-day notice. For fixed-term leases, you may need to wait until lease expiration or consider offering incentives for early termination. Remember that in North Dakota, you cannot force tenants with valid leases to leave simply because you're selling. | - | 20 |
| Draft Early Lease Termination Agreement (If Applicable) | If tenants are willing to vacate before their lease ends, create a formal agreement that outlines the terms of early termination. Include the move-out date, any financial incentives offered, conditions for returning security deposits, and releases from future obligations. Both parties should sign this document to make it legally binding. | Early Lease Termination Agreement | 25 |
| Prepare Cash for Keys Agreement (If Applicable) | If offering financial incentives for tenants to vacate, draft a formal 'Cash for Keys' agreement. This document should clearly state the amount being offered, the required move-out date and condition, and that payment will be made only after the tenant has fully vacated and returned the keys. This can be a useful tool when you need vacant possession but tenants have legal rights to stay. | Cash for Keys Agreement | 28 |
| Draft Real Estate Purchase Agreement with Tenant Provisions | Work with a real estate attorney to create a purchase agreement that addresses the presence of tenants. Include provisions about the transfer of security deposits, assignment of leases, tenant estoppel certificates, and whether the property will be delivered vacant or with tenants in place. In North Dakota, be sure to comply with N.D.C.C. § 47-16-07.1 regarding security deposit transfers. | Real Estate Purchase Agreement | 30 |
| Prepare Assignment of Leases | Draft a document that formally transfers all lease agreements from you to the buyer at closing. This document should list all current leases being transferred and affirm that these are valid, binding agreements. It should also state that the buyer assumes all landlord obligations under these leases after the closing date. | Assignment of Leases | 32 |
| Create Security Deposit Transfer Agreement | North Dakota law (N.D.C.C. § 47-16-07.1) requires landlords to transfer security deposits to the new owner or return them to tenants when selling property. Draft an agreement that documents the transfer of all security deposits to the buyer, including the amount for each unit. This protects you from liability for these funds after the sale. | Security Deposit Transfer Agreement | 34 |
| Notify Tenants of New Ownership | After closing, provide tenants with written notice of the property's new ownership. Include the new owner's name, address, and contact information for rent payments and maintenance requests. While not explicitly required by North Dakota law, this communication is essential for a smooth transition and helps fulfill your duty to tenants. | - | 40 |
| Complete Final Accounting with Tenants | If you've collected any rent in advance for periods after the sale, ensure these amounts are properly prorated and credited to the buyer at closing. Document all financial transactions related to the tenancies to avoid disputes after the sale is complete. | - | 42 |
Frequently Asked Questions
Yes, you can sell your rental property in North Dakota with tenants still living there. The property transfers with the existing lease agreement intact, and the new owner becomes the landlord. The tenants' rights under their current lease remain protected, and the new owner must honor the terms of the existing lease until it expires.
While North Dakota law doesn't specifically require you to notify tenants of a sale, it's considered best practice to inform them. Providing written notice helps maintain good relations and reduces confusion. You should also coordinate with your real estate agent about showing the property, as tenants have rights regarding entry to their rented home.
In North Dakota, landlords must provide 'reasonable notice' before entering a rental property, which is generally interpreted as at least 24 hours' notice. This applies to showing the property to potential buyers. The notice should specify the date, time, and purpose of the entry. Always try to schedule showings at convenient times for tenants.
No, you cannot unilaterally terminate a fixed-term lease simply because you want to sell the property. In North Dakota, you must honor the lease until its expiration date unless the lease specifically includes an early termination clause for property sales. For month-to-month tenancies, you can provide a 30-day written notice to terminate the tenancy.
When selling a rental property in North Dakota, you should transfer the security deposits to the new owner and provide an accounting of these funds. The new owner becomes responsible for the security deposits. Make sure to document this transfer in your sales agreement, and notify tenants in writing about the transfer of their security deposits to the new owner.
No, the new owner must honor the existing lease terms until the lease expires. They cannot raise the rent or change other terms during the lease period unless the lease specifically allows for such changes. After the lease expires, the new owner can propose new terms or rent increases with proper notice according to North Dakota law.
While it's often easier to sell a vacant property because it allows for more flexible showings and potential renovations, a property with reliable tenants can be attractive to investors looking for immediate rental income. Consider your target buyer—if you're marketing to homeowners who plan to occupy the property, selling without tenants might be preferable. If targeting investors, existing tenants with good payment history can be a selling point.
Yes, you can negotiate with your tenants to vacate early by offering what's commonly called 'cash for keys.' This is a legal agreement where you provide financial compensation in exchange for them terminating the lease early and moving out. Any such agreement should be documented in writing, signed by both parties, and specify the move-out date and compensation amount.
North Dakota requires sellers to disclose known material defects that could affect the property's value. For rental properties, you should also disclose information about existing leases, rental income, and any ongoing tenant issues. Provide copies of all current leases, rent rolls, and security deposit information to potential buyers. Failure to disclose material facts could lead to legal liability.
Tenants cannot unreasonably refuse access for showings if proper notice is given. However, they do have the right to quiet enjoyment of the property. If a tenant consistently prevents showings despite reasonable notice, you may need to address this through legal channels. It's best to work cooperatively with tenants by scheduling showings at convenient times and respecting their privacy and schedule.