Selling a rented property: tenant rights and the right of first refusal

What the third party is actually buying

The sale transfers bare ownership subject to an active tenancy: the buyer steps into the landlord's position regarding the existing agreement (unless a specific valid agreement dictates otherwise, always within legal limits). Rent conditions, duration and extensions follow the rules of the contract and the applicable LAU at the time.

Anyone buying a property to move into immediately without reviewing the tenancy may find themselves with a tenant who has the right to stay. This impacts both the asking price and the pool of potential buyers.

Right of first refusal and right of redemption (Article 25 LAU)

In many scenarios involving the sale of a rented property, the tenant holds a right of pre-emptive acquisition. The standard procedure is:

1. Notification to the tenant of the intention to sell and the core terms (price, timeframes, payment terms).
2. Right of first refusal (tanteo): a period during which the tenant decides whether to buy under those exact conditions.
3. If they do not exercise this right and you sell to a third party, the right of redemption (retracto) may apply if the sale takes place under more favourable conditions or within the legal timeframe.

The timeframes and formal requirements of Article 25 LAU must be strictly observed. A failure in notification could allow the tenant to claim the transfer in their favour or invalidate the sale as far as they are concerned. Verifying the current legislation and the specific tenancy agreement (including its signature date) is essential.

Tenancies signed before and after LAU reforms

Not all contracts are governed by the same rules: the execution date and applied extensions alter minimum contract terms, eviction grounds upon sale and pre-emptive rights. Relying on generic online advice for a contract signed in 2010 or 2020 without reviewing its specific duration clause is a common mistake.

Before setting a price and timeline, request a copy of the tenancy agreement, rental receipts and previous communications with the tenant.

Selling with a tenant in situ: viewings and privacy

The owner may conduct property viewings, but reasonable notice must be given and the tenant's privacy respected. Unannounced or contentious viewings drag out the sale process and can lead to formal complaints.

Coordinate schedules, explain the tenancy situation to the buyer and disclose the current rent and contract status transparently. Concealing the tenant until the deposit contract (arras) stage usually ends badly.

Can a property be sold vacant?

Only if the contract has legally expired, a valid early termination agreement exists, or under specific non-renewal or eviction scenarios defined by the LAU and case law. It is not enough to agree in the deposit agreement that the tenant will leave if the law does not yet allow it.

The sale can be made conditional upon the property being vacant by a specific date, but this condition must be realistic and compliant with tenant rights. Obtaining expert property legal advice before promising vacant possession to a buyer is strongly recommended.

Pricing and marketing

A tenanted flat with below-market rent is valued differently from one with high rent or a contract nearing expiration without compulsory extensions. Investor buyers focus on yield, whereas owner-occupiers focus on when they can move in.

In the property listing, clearly state the tenancy status without disclosing personal tenant details. Exterior or communal photos can be used if the tenant does not grant permission for interior photography. While this limits marketing reach, it is preferable to conflict.

Practical steps before listing

• Review the tenancy agreement and any addenda.
• Consult a solicitor regarding the formal notice of sale to the tenant.
• Prepare the land registry extract (nota simple) and community certificate, just as in a vacant sale.
• Decide whether to sell with the tenant in situ or seek contract termination beforehand (with a realistic timeline).
• Inform interested buyers before signing a deposit agreement.

Mistakes that increase costs

• Signing a deposit agreement with a buyer who expects to move in within 30 days despite the LAU stating otherwise.
• Failing to notify the tenant in accordance with Article 25 LAU.
• Subletting or omitting the tenancy details at the notary's office.
• Confusing eviction for owner occupation with selling at any point during the tenancy.

Selling a tenanted property requires commercial and legal coordination. At Sky Real Estate, we combine marketing and negotiation through property sales and promotion with contract reviews whenever necessary via Sky Law and expert property lawyers.