How to Sell Your Apartment or House Occupied by a Tenant

Owning a rental property can be a great investment, but there might come a time when you decide to sell it. 

How to Sell Your Apartment or House Occupied by a Tenant

Selling a property that's currently rented out comes with unique challenges, as the tenant has legal rights that must be respected throughout the process. This article will guide you through the steps involved in selling a rented apartment or house.

Can I Sell My Rented Apartment? Is It Even Possible?

Yes, it's possible. Generally, as the owner, you have the right to sell your property whenever you wish. However, if the property is occupied by a tenant, this introduces some specific considerations. 

Both federal and cantonal laws in Switzerland regulate how these sales must be conducted, particularly to ensure that the tenant’s rights are not unfairly compromised.

What Happens to the Lease When You Sell?

When selling a property that's occupied by a tenant, you have two main options:

Terminate the Lease Before Selling: This means you would give the tenant notice to vacate the property before putting it on the market. However, it's important to note that this needs to be done within the framework of the lease agreement and with proper notice.

Sell the Property with the Tenant in Place: In this scenario, the lease is simply transferred to the new owner, who becomes the new landlord. This option often appeals to buyers looking for rental properties since they inherit a property that's already generating rental income.

1. The Tenant's Right of First Refusal

In some regions, tenants might have a "right of first refusal," which means they get the first chance to buy the property before it’s offered to other buyers. 

However, in Switzerland, this right is not fully established at the federal level. For example, in the canton of Geneva, tenants may have the opportunity to buy the property they’ve been renting if they've lived there for at least three years. But this is the exception, not the rule.

2. Lease Termination by the Landlord

Since there isn’t a robust right of first refusal, landlords might choose to end the lease before selling. Lease agreements in Switzerland are usually open-ended, so the termination would need to follow the regular notice period:

Three months' notice is standard, which should align with the end of a rental quarter or the anniversary of the lease’s renewal date.

Validity of Notice and Tenant Disputes

For the notice to terminate the lease to be valid, the landlord must act in good faith. If the tenant believes that the termination is unfair or done in bad faith (for instance, to pressure them into buying the property), they can contest it. If the tenant wins the dispute, they could be granted a protection period, allowing them to stay in the property for up to three years.

Transferring the Lease to the New Owner

If the property is sold with the tenant still living there, the lease transfers automatically to the new owner, who steps into the role of landlord with all the same rights and responsibilities. In urgent cases, the new owner might be able to terminate the lease early if they or a close relative needs to live in the property.

Key Points to Remember:

• You can sell a rented property.
• There is no established tenant’s right of first refusal under Swiss federal law.
• You can either terminate the lease before selling or sell with the lease in place.
• A three-month notice period is required to terminate a lease.

The reason for lease termination must be legitimate, or the tenant may challenge it, potentially gaining the right to stay for three years.

If the lease is not terminated, it transfers to the new owner upon sale.

What Are the Legal Risks of Selling Without Terminating the Lease?

If the new owner ends the lease and you didn't inform the tenant of the sale, the tenant might have grounds to sue you for damages.

When Can You Sell a Rented Property?

You can sell at any time, but it's crucial to follow legal procedures, such as providing at least three months' notice, acting in good faith, and terminating the lease in advance if you prefer not to sell with the lease intact.

Is There a Right of First Refusal for Tenants?

No, Swiss law does not fully recognize a tenant's right of first refusal, although some cantons, like Geneva, offer limited possibilities for tenants to buy their rental property under certain conditions.

Can You Terminate a Lease Outside the Contract Terms to Sell a Rented Property?

Yes, but this would be considered an extraordinary termination, which is only permissible for specific reasons, such as the tenant’s death, non-payment of rent, or abandonment of the property. Wanting to sell the property does not qualify as a valid reason for an extraordinary termination.