Does the lease end when the house sells?
Not on its own, and that is the first thing to get straight. If you are shopping in New Braunfels and the house you like has a tenant in it, that does not have to scare you off. Texas has a standard contract form for exactly this situation, and it walks you and the seller through the choices. The point is to make the call early, with the lease in front of you.
Since April 2021, a TREC contract on a home with a residential lease has needed the Addendum Regarding Residential Leases. The current version is form 51-1. It gives you and the seller two choices, and you check only one.
| Box A: leases end by closing | Box B: you take the lease over | |
|---|---|---|
| What the seller promises | Every residential lease is terminated by closing, and the seller delivers the house with no tenant in possession | The seller assigns each lease to you at closing, and you assume it |
| Lease papers | Not part of this box | Written lease: copies before you sign or within 3 days after the effective date. Oral lease: the seller’s written notice of the tenant’s name, the rental amount and the term |
| Security deposit | Not part of this box | Transferred to you at closing |
| Seller statements about the tenancy | Not part of this box | Seven statements, with a duty to tell you if one stops being true |
| Written for a sale where | The house is delivered empty | The tenant and the rent continue after closing |
Start with one detail about Box A. It is a promise between you and the seller. It does not change the tenant’s lease. The form says so in its own notice, and whether a seller can end a lease early depends on what that lease says. If the lease runs into next summer and has no early exit, checking Box A does not make the tenant pack.
So before anyone picks a box, get two answers: when does the lease end, and does it give the landlord any right to end it sooner? If those answers are unclear, have a Texas real estate attorney read the lease before Box A goes into your contract. That is a short conversation now compared with a standoff on closing day.
What should you get before you write the offer?
Get the lease, and get all of it. The addendum defines a residential lease as any lease of the property to a tenant, including any addendum, amendment or move-in condition form. Oral leases count too.
Under Box B, how you get the terms depends on whether the lease is written:
- Written lease, before you sign. The seller hands you copies before you sign the contract.
- Written lease, after you sign. The seller delivers copies within 3 days after the effective date, and you get a window after receiving them to terminate and get your earnest money back. The number of days is negotiable, so treat it like any other deadline you agree to.
- Oral lease. The form asks for a written notice instead of copies. The seller gives you written notice of the tenant’s name, the rental amount and the term, and the form lists no termination period for that notice. Get that notice and ask your questions before you sign.
The short list I would want in hand:
- The signed lease and every amendment or addendum, or the seller’s written notice for an oral lease
- The move-in condition form
- The monthly rent and the date it is due
- The security deposit amount
- The lease end date and any renewal or early-termination terms
- Anything the seller knows about late payments, disputes or side agreements
If your contract has a delivery window, line it up with your option period so you are not juggling two clocks blind. If you want a refresher on how the option fee and earnest money each work, my option fee vs. earnest money guide walks through it. My Texas contract contingencies guide covers the other exits you may already have.
What happens to the tenant’s security deposit?
It becomes yours to return. Texas law makes the new owner liable for returning security deposits starting the day title transfers. Under Box B, the seller transfers the deposits to you at closing.
You also owe the tenant a signed statement saying you have acquired the property, that you are responsible for the security deposit and the exact dollar amount of that deposit. That letter is the buyer’s job under the addendum, not the seller’s, so the dollar figure in it needs to be right.
Compare three numbers before you sign the closing papers:
- The deposit amount written in the lease
- The deposit amount the seller lists for you
- The amount shown as transferred to you for the deposit
If they do not match, ask about it then, while the seller is still at the table. Once you own the house, the tenant will look to you for that deposit.
Watch for prepaid rent in the same review. The addendum asks the seller to state whether any tenant has prepaid rent. If the tenant paid the last month up front, the seller explains that on the addendum, and you will know about that money before closing instead of after.
What if something changes with the tenant before closing?
The addendum has a built-in process for that. With Box B, the seller makes seven statements about each lease, to the seller’s knowledge:
- The lease is in full force and effect
- No tenant is in default or in violation of the lease
- No tenant has prepaid any rent
- No tenant is entitled to an offset against rent
- There are no outstanding tenant claims against the seller involving the property
- There are no pending disputes with any tenant or prior tenant
- There are no other agreements, options or rights outside the lease between landlord and tenant
If one of those becomes untrue after the contract is signed, the seller has to tell you promptly and then has 7 days to cure it. If it is still untrue after those 7 days, you have 5 days to terminate and get your earnest money back. Miss that 5-day window and you waive that termination right. The closing date stretches day by day as needed so those deadlines can run.
What to do when a notice arrives
Send the seller’s notice to your agent the day you see it. Ask your agent to confirm the date the notice took effect under the contract and the exact 7-day and 5-day deadlines that follow, then put those dates on your calendar and share them with your lender. Ask the seller what is being done to fix the issue and when you will hear back. If you are not sure whether what happened changes one of the seven statements, or what the lease says about it, get that answered by the right professional instead of guessing at the kitchen table.
What if you need the house empty at closing?
Then the lease end date is your real timeline. Box A is written for a sale where the seller delivers the house with no tenant in possession at closing. Your moving truck still depends on the tenant actually leaving, so bring the lease end date to that conversation with your agent.
If a tenant stays past the end of the lease, the landlord must give written notice to vacate, usually at least three days, before filing an eviction suit. In Comal County, that suit is filed with the Justice of the Peace in the precinct where the home sits. That is a court process with its own calendar, and it is not something you want to discover the week of closing.
A few questions keep you out of that spot. Ask when the lease ends and whether the tenant has already been given notice. Ask whether the seller expects the home to be empty before your closing date or right up against it. If you are financing the home as a place you will live, ask your lender early how a lease that runs past closing fits your loan. My buyer page has more on lining up those steps.
One more distinction. If the seller wants to stay in the house after closing, that is a different setup. A temporary lease between buyer and seller is not covered by this addendum, and TREC has a separate Seller’s Temporary Residential Lease form for it. My seller leaseback guide covers that arrangement.
