Selling a Duplex With Tenants Still Living In It: What Changes at Closing

The advice a duplex owner usually hears is to wait. Wait for the leases to run out, wait for the second unit to go vacant, then list it empty and clean. Sometimes that is right. Often it means carrying a building another year and repainting units for a buyer who may not care.

You can sell a duplex with people living in it, and plenty of buyers prefer it, because an occupied building already proves what it rents for. What changes is the paperwork and the courtesy, not the possibility.

The lease does not care that the building changed hands

A rental agreement attaches to the property, not to the person who signed it. Ohio's landlord-tenant law defines a landlord as the owner or lessor of the premises along with anyone authorized to manage it or receive rent, under Ohio Revised Code 5321.01. When the deed moves, the role moves with it, and the tenant keeps the same lease at the same rent.

The lease does not have to be recorded for this to hold. Ohio Revised Code 5301.08 exempts leases for terms not exceeding three years from the acknowledgment and recording requirements that apply to other interests in land, so an ordinary one year lease in your filing cabinet is still good against a new owner.

Your buyer is stepping into your agreements, not buying an empty shell, and a buyer who understands that going in will not ask you to deliver the building vacant.

The deposits are a liability, not spending money

Under Ohio Revised Code 5321.16, when a tenancy ends the landlord has thirty days to return the deposit or deliver a written, itemized notice of every deduction along with whatever is still owed. Fail that, and the tenant can recover the amount wrongfully withheld, damages equal to that amount, and reasonable attorney fees.

There is also an interest rule people forget. Any deposit in excess of fifty dollars or one month's rent, whichever is greater, earns five percent per year on the excess once the tenant has been in possession for six months or more. On a long-tenured unit that is a real accrued number, and it does not disappear because the building sold.

What the statute does not say is who holds the money after a sale, which is why it belongs in the purchase agreement in plain language: the deposits, plus accrued interest, are credited to the buyer at closing, and the buyer takes on the thirty day obligation. Settle it in writing and it is a line item. Leave it vague and it becomes a dispute months later, when a tenant moves out and two former owners point at each other.

Showings are the part that requires actual manners

You have a right of access, and it is not unlimited. Ohio Revised Code 5321.04 requires a landlord to give reasonable notice of intent to enter and to enter only at reasonable times, and it states that twenty four hours is presumed reasonable in the absence of evidence to the contrary. From the other direction, Ohio Revised Code 5321.05 says a tenant shall not unreasonably withhold consent for the landlord to exhibit the unit to prospective or actual purchasers.

So the law lands where common sense does. You can show the building. You give notice first, you pick a decent hour, and you do not stack six showings into a Saturday.

Worth knowing too: Ohio Revised Code 5321.02 bars retaliating against a tenant who reports code violations or complains about a violation of their rights, whether by raising rent, cutting services, or threatening eviction. A tenant who gets nervous during a sale and starts asking questions is exercising an ordinary right.

What a buyer asks for before they name a price

An occupied duplex is priced off documents, not off a walkthrough. Expect to be asked for both current leases, a rent roll showing what each unit pays and what has actually been collected, a deposit ledger with the amount and date for each tenant, who pays which utilities, and any written notices already exchanged. Many buyers also ask each tenant to sign an estoppel certificate confirming their rent, deposit and term, which is routine rather than a sign of distrust.

If the building predates 1978, and in this county most duplexes do, the federal lead disclosure rule follows it. The EPA requires sellers of pre-1978 housing to disclose known lead-based paint and hazards, hand over available records and reports, provide the Protect Your Family From Lead In Your Home pamphlet and a lead warning statement, and give a buyer a ten day window to have the paint inspected.

The owner with all of that in one folder gets a better number than the owner reconstructing it, because unanswered questions get priced as risk.

Closing day arithmetic

Three things get trued up, and none are hard if they are decided in advance. Rent is prorated for the month of closing, so you keep the days you owned. Deposits and accrued interest are credited to the buyer. And the tenants get told in writing who owns the building now and where the rent goes on the first.

That last one has teeth. Ohio Revised Code 5321.18 requires a written rental agreement to disclose the name and address of the owner and of the owner's agent, and a landlord who leaves tenants in the dark loses the right to insist on notices the tenants would otherwise owe. A one page letter to each unit handles it.

The tax bill nobody budgets for

Years of depreciation deductions come back at you when a rental sells. The IRS is direct about the rate: the portion of any unrecaptured section 1250 gain from selling section 1250 real property is taxed at a maximum twenty five percent rate, separate from the rate on the rest of the gain, and higher earners may also owe the net investment income tax.

None of this is legal or tax advice, and it is not a reason to hold a building forever. It is a reason to call your accountant before you sign anything, because the number is usually larger than owners expect.

Would selling it occupied be simpler than waiting out the leases?

If you are tired of the building but the leases have eight months to run, you do not have to choose between waiting it out and putting anyone out. RCB Rentals is local to Tuscarawas County, we buy occupied properties as they are with tenants and leases in place, and we credit the deposits at closing so nothing lands on your tenants.

Get a no-obligation cash offer, and we are glad to tell you what your duplex looks like from a buyer's side even if you keep collecting rent for another ten years. No pressure either way.