Landlord Selling Investment Property To Renters

Added February 28, 2009 by Ilyce R. Glink

Print Articles

Summary: If you are a landlord, there are issues you may have to deal with if you sell investment property to renters. As a landlord, you should keep the mortgage lenders involved in the process because the lender may want to call the loan. In fact, the mortgage lender most likely has the right to call the loan if you, as a landlord, sell investment property to your renters.

Q: A reader recently asked what would happen if he sold his investment property to his renters. In particular, he was concerned about what, if any, action the lender might take.

You suggested in your answer that an installment sale might be used because it would allow the property remaining in the present owner's name. However, you did not mention that the lender would then have the right under the standard "due on sale" provision in virtually every mortgage to call the loan due.

Just a thought from your friendly neighborhood Ohio real estate attorney.

A: Thanks for pointing out that mortgage lenders, in this situation, may have the right to call the loan (that is, demand you repay it immediately), although not every lender will do so.

Still, it's a risk every investment property owner should be aware of. It's a good idea to check with your lender to see whether the due-on-sale clause will be triggered before closing on an installment sale.

Thanks for reading the column and taking the time to write.

Jan. 19, 2009.

See more articles on this topic by clicking on the "RELATED ARTICLES" above and to the right.

We have over 5000 articles on Real Estate Advice, Personal Finance Advice and Consumer Advice on our site. We encourage you to look at these articles. As always, if you have a comment on our articles, don't forget to post your comment below. We thank you for coming to ThinkGlink.com.

© Ilyce R. Glink. All rights reserved. This content may not be used, distributed, syndicated, compiled or excerpted in any medium or form without written authorization from Think Glink, Inc. For information on syndicating ThinkGlink.com please contact us.

Previous article Next article