You’re done being a landlord. The tenant pays late, the AC died again in July, and the house three suburbs over has quietly become a second job you never wanted. So you want out. But there’s a tenant living in it with eight months left on the lease. Can you even sell?
Yes. You can. But there’s a right way and a wrong way, and the wrong way in Texas can cost you the deal or land you in a fight.
The short version
In Texas you can sell a rental property at any time, even with tenants in it. But the lease goes with the house. A fixed-term lease (say, a 12-month) stays in force, and the new owner has to honor it to the end. A month-to-month tenant can be given proper written notice, at least one month under the Texas Property Code. You can’t just kick a paying tenant out because you found a buyer. Sell it tenant-occupied to an investor, or wait for the lease to end and sell it vacant. Both work. Which one nets you more depends on the house and the tenant.
That’s the whole thing in a paragraph. Now let me fill in the parts that trip people up.
”The lease runs with the land”: what that actually means
Here’s the rule that surprises most landlords: in Texas, the lease is tied to the property, not to you. When you sell, the buyer steps into your shoes as the landlord and inherits your tenant and your lease, exactly as written.
So if your tenant signed a 12-month lease at $1,800 and there are eight months left, the buyer is getting eight months of $1,800 rent and a tenant who has every right to stay. They can’t raise the rent mid-lease, change the terms, or show the tenant the door early just because the name on the deed changed.
That’s not a problem. For the right buyer it’s the whole appeal: an asset already producing income on day one. For the buyer who wanted to move in or gut it, it’s a dealbreaker. Knowing which buyer you’re selling to is half the battle.
Fixed-term lease vs. month-to-month: your options split here
Everything about your sale changes depending on what kind of lease your tenant is on.
Fixed-term lease (a 12-month, say). You’re mostly locked in. You can’t end it early just to sell. The lease survives the sale and the buyer honors it to expiration. Your realistic moves: sell as-is to an investor who wants the income, or wait until the term ends and sell vacant. You can ask the tenant if they’d take a deal to leave early (more below), but you can’t force it unless they break the lease.
Month-to-month. You’ve got room to move. Under Section 91.001 of the Texas Property Code, either side can end a month-to-month tenancy with written notice, and for a monthly rental period that notice runs at least one month. Give proper written notice, let the clock run, and you can deliver the house vacant. Check your lease too, because some require more notice than the statute, and the longer one usually wins.
One thing I’ll say plainly: don’t get clever with notice. Texas landlord-tenant law is an easy place to get yourself sued. Put it in writing, follow your own lease, count the days honestly.
The security deposit: don’t let it become your problem
This one quietly bites sellers at closing. That security deposit you’re holding doesn’t just vanish when you sell.
At a Texas closing you’ve really got two clean options. Return the deposit to the tenant (minus any lawful deductions) and tell the new owner there’s no deposit on file. Or transfer the deposit to the buyer and give the tenant written notice with the new owner’s name and address. Either way, the tenant gets told in writing what happened to their money.
Once title transfers, the new owner becomes responsible for returning that deposit within 30 days of the tenant moving out, per Chapter 92 of the Property Code. Handle it cleanly at the table and it’s a non-issue. Ignore it and it’s what your tenant takes you to small-claims court over a year later.
Selling tenant-occupied vs. waiting for it to go vacant
This is the real decision, so let’s be honest about the trade-offs.
Sell it tenant-occupied (to an investor). You skip the turn. No make-ready, no vacancy, no lost rent while it sits. The rent keeps hitting your account right up to closing. The catch: your buyer pool narrows to investors, and investors buy on the numbers, so the offer reflects the income and the condition, not what a freshly renovated house would fetch on the open retail market. If your tenant is solid and paying, that lease is actually an asset that can help your price with the right buyer.
Wait for vacancy, then sell retail. Now you can list to the whole market, including owner-occupants who’ll pay top dollar for a house they’re going to live in. You’ll usually net more on a clean, vacant, market-ready home. But you eat the vacancy, the make-ready, maybe a few months of carrying costs, and the risk of a tenant who doesn’t leave clean, or doesn’t leave on time.
There’s no universal right answer. A decent-shape rental with a month-to-month tenant is often worth turning vacant and listing. One that needs $30K of work with a tenant who’s behind? Sell as-is to an investor all day. (If yours needs real repairs, I wrote how to sell a house without repairs, showings, or delays. The math applies to rentals too.)
”Cash for keys”: the move most landlords don’t know about
If you’ve got a fixed-term tenant and you really want the house empty, you don’t have to wait it out or go to war. You can negotiate.
Cash for keys is what it sounds like: you offer the tenant money to move out early and leave the place clean, in a signed written agreement. Done right, it’s faster and far cheaper than an eviction, and nobody fights. A tenant who’s also tired of the situation will often take a fair number to be gone by month’s end. Spell out the move-out date and condition, and hand over the money when they hand over the keys, not before.
The North Texas piece
A couple of local realities, because they move this decision more than people expect.
The DFW market has cooled toward a buyer’s market: more inventory, more days on market, more price cuts than we’ve seen in a while. For a landlord, that cuts both ways. A vacant, fixed-up rental might sit longer than it would have two years ago, so the carrying cost of “wait for vacancy then list” is higher than it used to be. But it also means more investors are shopping, and a turnkey rental with a paying tenant and a clean lease is a genuinely attractive package in a market where move-in-ready retail buyers have gotten picky.
And don’t forget the tax tail. Selling a rental isn’t like selling your homestead. There’s no $250K/$500K exclusion, and you may face capital gains plus depreciation recapture on all those years you wrote it off. A 1031 exchange into another property can defer that hit. Either way, call your CPA before you sign, so the number that lands in your account is the one you expected.
Here’s how I’d actually look at your situation
I’m a licensed Texas agent and an active investor, so I sit on both sides of this. When a landlord calls, I’m not just trying to buy cheap. I look at the lease, the tenant, the condition, and the numbers, and tell you straight: list it vacant and net more, or sell as-is with the tenant in place and be done by next month. Sometimes we buy it this week, tenant and all. Sometimes it’s “let that lease run, here’s what it’ll list for.” Either way you stop guessing.
FAQ
Can I sell my rental property in Texas if my tenant still has a lease? Yes. You can sell at any time, but a fixed-term lease goes with the property, and the new owner has to honor it until it expires. You can’t end a fixed-term lease early just because you’re selling. A month-to-month tenant can be given proper written notice instead.
Do I have to give my tenant notice before selling? You don’t need their permission to sell, and there’s no special “I’m selling” notice that ends a fixed lease. But if you want a month-to-month tenant out so you can sell vacant, you must give proper written notice, at least one month under Texas Property Code §91.001, or longer if your lease says so.
What happens to the security deposit when I sell? At closing you either return it to the tenant (minus lawful deductions) or transfer it to the new owner and notify the tenant in writing with the new owner’s name and address. After the sale, the new owner is responsible for returning the deposit within 30 days of the tenant moving out.
Will I get less money selling with a tenant in the house? Sometimes. Selling tenant-occupied usually means selling to an investor, who buys on the numbers, so the offer reflects the rent and condition, not a renovated-retail price. But you skip vacancy, make-ready, and carrying costs. On a clean, market-ready house, selling vacant to the open market usually nets more. It depends on the house and the tenant.
Can I pay my tenant to leave early? Yes, that’s “cash for keys.” You offer the tenant money to move out early and leave the place clean, in a signed written agreement. It’s usually faster and cheaper than waiting out the lease or pursuing an eviction. Put it in writing and pay when you get the keys.
Want to know what your rental’s worth, occupied or vacant?
If you’ve got a tenant-occupied house in the Dallas-Fort Worth area and you’re ready to be done, I’ll run both numbers for you: a real cash offer you could take as-is with the tenant in place, and an honest estimate of what it’d net listed vacant. Free, no pressure. If waiting it out and listing nets you more, I’ll tell you.
Get your free cash offer on your rental
We’ve closed $6M+ in deals across Texas and Oklahoma since 2019, plenty of them for landlords who were just ready to hand off the keys and the headaches. (Weighing a cash sale against listing it? Here’s signs it’s time to sell off-market. Inherited the rental? Read how to sell when life changes fast.)
Mac Does REI · Brokered by Fathom Realty · 6841 Virginia Pkwy, McKinney TX 75071 · (469) 553-0906. Cody McDonald is a licensed Texas real estate agent and an active investor. Listing and agent services are offered in Texas through Fathom Realty; cash purchases are made by NTX Realty Trust as a principal buyer. This article is general information about Texas landlord-tenant and tax matters, not legal or tax advice. Talk to a licensed attorney or CPA about your situation. Equal Housing Opportunity.