Selling a Rented Cary Home When You Live Out of State

Caul Group Residential, brokered by eXp Realty

You can sell a rented Cary home while you live in another state, and you do not have to wait for the lease to end. In North Carolina, a tenant who lives in the home usually keeps the lease after a sale, so your choice is to sell with the tenant in place, reach a written deal with the tenant to move out early, or wait and sell the home empty.

This guide covers how leases work in a sale, how showings work with a tenant, what happens to the security deposit, and how you can close from far away. This is general information, not legal or tax advice. Your lease and your closing attorney have the final word for your sale.

Does the lease end when I sell?

Usually not. The NC Real Estate Commission's renting guide says that when a landlord sells, a tenant living in the home is generally protected. The buyer has to honor the lease until it ends.

There is one main exception. If the lease says the tenant agrees to move out when the home is sold, that clause can apply. Read your lease closely, or have your property manager pull it.

The new owner does not have to renew the lease when it ends.

Your three main choices

1. Sell with the tenant in place

The buyer takes over the lease and the tenant stays. This often fits a buyer who wants a rental. Buyers will ask for:

• A copy of the lease and any changes to it
• The rent amount and the date rent is due
• The security deposit amount
• Any open repair requests

2. Ask the tenant to move out early, in writing

Some owners and tenants agree on an early move-out date. The tenant may ask for help with moving costs or a lower last month's rent. Put any deal in writing and have both sides sign it. A tenant does not have to agree.

3. Wait for the lease to end, then sell the home empty

An empty home is simpler to show, clean, paint and photograph. It also opens the home to buyers who want to live in it. The trade-off is that you pay the mortgage, taxes, insurance and utilities while it sits empty.

Should I wait for the lease to end?

It depends on your lease dates, your costs and who you think the buyer will be. Here are questions to ask:

• How many months are left on the lease?
• Does the lease turn into month to month when it ends?
• Does the lease say anything about a sale or about showings?
• Is the home in shape to show now, or does it need work?
• Can you carry the costs if the home is empty for a few months?

If the lease has turned into a month-to-month lease, NC law (G.S. 42-14) lets either side end it with at least seven days' notice before the end of the month. For a year-to-year lease, the notice is one month before the end of the year. Your lease may ask for more notice, so check it.

Can I show the home while the tenant lives there?

Only if the lease allows it. The NC Real Estate Commission says many leases let the landlord show the home to buyers or put up a for sale sign. Entry still has to be at reasonable times and with reasonable notice. If the lease says nothing about entry, the landlord has no right to enter during the lease.

Tips that help showings go well:

• Tell the tenant your plan early and in writing.
• Set showing windows that work for the tenant.
• Give notice before each showing, as your lease requires.
• Ask before taking photos or video of the tenant's things.
• Think about a thank-you, like a rent credit, for keeping the home ready. Put it in writing.

What happens to the security deposit?

NC law (G.S. 42-54) says that within 30 days after the sale, the seller (or the seller's agent) must do one of two things:

• Move the deposit to the new owner and tell the tenant by mail, with the new owner's name and address, or
• Give the deposit back to the tenant, minus any lawful deductions

Your closing attorney can help you track this on the settlement statement.

What if the tenant will not leave?

In North Carolina, a landlord cannot lock out a tenant, shut off utilities or remove their things to force a move. G.S. 42-25.6 says a residential tenant can only be removed through the court process in Chapter 42. If a tenant stays after the lease ends, talk with an NC attorney.

This is one reason a contract with a tenant in the home should be clear about whether the buyer gets the home empty or with the lease.

Forms you still need to give

As the owner, you still give the buyer the NC Residential Property Disclosure Statement, even if you have not lived in the home in years (G.S. 47E-4). Ask your property manager for repair records, since you may not know about every issue.

How to close from out of state

Most of the work can happen without you in Cary. Here are the common ways to sign:

• Sign with a notary where you live. NC law (G.S. 47-2) lets a notary public in another state take your signature on papers that will be recorded in NC. Your closing attorney can send you the deed and other papers ahead of time.
• Use a power of attorney. You can name someone to sign for you. NC law (G.S. 47-28) says a power of attorney used to sell real estate must be recorded with the register of deeds. Ask your closing attorney early so it is ready before closing.
• Remote online signing. North Carolina's rules for remote electronic notary signing are still being put in place by the NC Secretary of State. Ask your closing attorney which signing methods they accept for your sale.

Plan to send your ID, payoff details for any loan, and wiring details through your closing attorney's secure process. Always call the attorney's office at a number you already know before you wire money or send bank details.

Taxes when you sell a home you rented out

Tax rules can be different when a home was a rental. IRS Publication 523 explains the home sale exclusion, its ownership and use tests (2 of the last 5 years), and how rental use and depreciation can affect what you owe. Talk with a tax professional before you list.

A simple plan

1. Pull the lease and read the end date, renewal terms, and anything about showings or a sale.
2. Get a value for the home. You can start with our home value tool.
3. Decide: sell with the tenant, agree on an early move-out, or wait.
4. Tell the tenant your plan in writing.
5. Pick a listing agent who can handle showings and repairs while you are away. See how to choose a listing agent.
6. Ask your closing attorney early how you will sign.
7. Settle the security deposit within 30 days after closing.

Frequently asked questions

Can I sell my Cary house if a tenant lives there?

Yes. In North Carolina, the buyer usually takes the home with the lease in place, and the tenant can stay until the lease ends.

Does a lease end when a house is sold in NC?

Usually not. The NC Real Estate Commission says the buyer generally has to honor the lease, unless the lease says the tenant will move out when the home is sold.

Should I wait for the lease to end before I sell?

It depends on how long the lease has left, your costs while the home is empty, and whether your likely buyer wants a rental or a home to live in. An empty home is easier to show, but you carry the costs.

Can my tenant refuse showings?

The lease controls this. Many leases allow showings at reasonable times with reasonable notice. If the lease says nothing about entry, you have no right to enter during the lease.

What happens to my tenant's security deposit when I sell?

Within 30 days, you must either move it to the new owner and tell the tenant by mail, or return it to the tenant minus lawful deductions (G.S. 42-54).

Do I have to come to Cary to close?

Often no. You can sign with a notary where you live, or name someone to sign with a recorded power of attorney. Ask your closing attorney which ways they accept.

Can I ask my tenant to leave early?

You can ask, and some tenants agree. Put any deal in writing. A tenant does not have to agree, and only a court can remove a tenant.

Do I still fill out the disclosure form if I never lived there?

Yes, as the owner you still give the buyer the NC Residential Property Disclosure Statement. You answer based on what you actually know.

Talk with a Cary listing team

We have been in real estate since 2001 and help owners sell homes in Cary and across the Triangle. See how we help sellers, contact us, or call (919) 263-7653.

We are the #1 Resale Team in the Triangle.