Selling a Tenant-Occupied Home in San Antonio: Lease Assignments, Estoppels, and Deposits at Closing

When you sell a house in San Antonio with a tenant in place, the lease does not evaporate at closing. It transfers with the property. The buyer becomes the new landlord for whatever term remains, on the same rent, the same deposit, and the same rules. That single fact controls everything else — how you market the home, which TREC addendum you attach, what the title company collects at funding, and how much friction you can expect from a buyer's lender.

The sellers who get burned are the ones who assume they can hand the buyer keys and walk away. They cannot. If you mishandle the security deposit under Texas Property Code § 92.105, or misrepresent the lease terms on the disclosure, you can still be sued after closing — sometimes by the tenant, sometimes by the buyer.

Read your lease before you list

Pull the executed lease and read every page, including any addenda. You are looking for four things:

• Term and end date. A buyer using conventional financing on a home priced as owner-occupied cannot close if the lease runs past their intended move-in. Investors do not care. Owner-occupants do.
• Assignment or sale language. Most Texas Association of Realtors (TAR) residential leases are silent on sale but permit assignment of the landlord's interest by operation of law when the property conveys. Some custom leases give the tenant an early-termination right if the property is sold. Read it.
• Right of first refusal. Rare in TAR forms, common in owner-drafted leases. If your tenant has ROFR, you must present the buyer's offer to them first, in writing, with the timeline the lease specifies.
• Renewal status. A lease that already rolled to month-to-month under Texas Property Code § 91.001 is a different animal — the buyer can terminate with 30 days' written notice after closing, which most investor buyers want.

If your tenant is a servicemember stationed at JBSA-Lackland, JBSA-Randolph, or Fort Sam Houston, the SCRA (50 U.S.C. § 3955) gives them the right to terminate on PCS or deployment orders regardless of what your lease says. That is a lease attribute your buyer will ask about.

Disclose the lease on the TREC contract

When the buyer writes an offer on TREC 20-17 (One to Four Family Residential Contract (Resale)), the existing lease has to be addressed. The standard tool is the Addendum Regarding Residential Leases (TREC 51-0). It tells the buyer:

• Whether tenants are in possession
• The lease term and monthly rent
• The security deposit amount being transferred
• Whether a move-in inventory or condition form exists

Attach a copy of the lease and any amendments to the addendum. Do not paraphrase the rent or the end date from memory — pull the numbers off the signed document. Misstating rent by even $50 on the addendum is the kind of thing a buyer's attorney will use as leverage during the option period.

Also complete the Seller's Disclosure Notice (TREC OP-H) honestly regarding tenant occupancy, any prior tenant damage you know about, and any active complaints or repair requests. A pending repair request you did not disclose becomes a lawsuit after closing.

The estoppel certificate

A tenant estoppel certificate is a short statement, signed by the tenant, confirming the lease facts: rent amount, deposit held, end date, whether any rent is prepaid, whether either party is in default, and whether there are any side agreements. Lenders financing a buyer who intends to keep the property as a rental will require one. Cash investors usually request one too.

Get the estoppel signed before you accept an offer if you can. If you wait until the option period, a tenant who is unhappy about the sale suddenly has leverage. Send them a plain one-page form, offer to pick it up in person, and give them a firm deadline that matches your listing timeline.

If your tenant refuses to sign, that is a signal. It usually means they dispute something — a repair you never made, a deposit deduction from a prior year, an unauthorized occupant. Fix the underlying issue before a buyer's due diligence surfaces it.

Security deposits transfer at closing

Texas Property Code § 92.105 is explicit: when a rental property is sold, the seller must either (1) transfer the security deposit, less any lawful deductions, to the new owner and give written notice to the tenant, or (2) return the deposit to the tenant. Doing nothing leaves you personally on the hook even after you no longer own the house.

At a Bexar County closing, the clean move is a credit on the settlement statement — the escrow officer at the title company debits you the deposit amount and credits the buyer, and both of you sign a written acknowledgment that the deposit has been transferred. Send the tenant a dated letter (email is fine if the lease permits electronic notice) telling them the new owner's name, address for notices, and that the deposit followed the property.

Do the same for any last-month's-rent prepayment, pet deposits, and pet fees held on account. If you deducted anything from the deposit during the tenancy, document it before closing rather than trying to reconstruct it later.

Showing a home you do not live in

The lease governs entry. Most TAR leases require reasonable advance notice — commonly 24 hours — for showings, and limit them to reasonable hours. Do not let your listing agent put a Supra lockbox on a tenant-occupied door without the tenant's written consent.

Practical rules that keep the relationship intact:

• Cluster showings into two or three windows per week rather than random one-off requests
• Offer the tenant a rent concession (one week's rent is common) in exchange for cooperation and keeping the home show-ready
• Never enter without confirmed notice, even if you own the house — a tenant's right of quiet enjoyment under Texas law does not pause because you signed a listing agreement
• Skip open houses. They are low-value on tenant-occupied listings and high-friction

If you push showings without notice, you invite a claim under the tenant's implied warranty of quiet enjoyment and, in extreme cases, a lockout complaint under Texas Property Code § 92.0081.

Pricing and the buyer pool

A tenant in place changes who will pay full price. Broadly:

• Owner-occupant buyers discount for the lease. They cannot use FHA or VA if they cannot certify intent to occupy within 60 days, so if your lease runs past that window, you lose the entire FHA/VA buyer pool. In price-sensitive ZIPs like 78221, 78227, and 78228, that is a meaningful hit.
• Investor buyers will pay closer to full market if the rent is at or above market and the tenant has a clean payment history. A below-market rent locked in for eight more months is a real dollar-for-dollar deduction from what an investor will offer.
• 1031 exchange buyers love a tenant already paying — no vacancy risk during their identification window. If your rent is strong and your tenant is stable, market the property to exchange buyers specifically.

Pull comparable rents from SABOR's rental data or a broker price opinion before you list. If your tenant is $300/month under market on a $1,800 house, expect an investor to knock roughly the net-present-value of that gap off their offer.

What most people get wrong

• Assuming they can terminate the lease to sell vacant. You cannot. "I'm selling" is not a lawful ground to end a fixed-term Texas residential lease. Offer cash for keys in writing if you want possession before the term ends — $1,500 to $3,000 is typical in Bexar County — and get a signed lease termination agreement.
• Forgetting the deposit transfer letter. The settlement-statement credit is not enough by itself. Send the tenant written notice under § 92.105 or the deposit liability stays with you.
• Letting the agent schedule showings directly with the buyer's agent. Every showing request should route through you or a designated point of contact who confirms with the tenant first. Third-party showing services default to "go anytime," which is not what your lease says.
• Not disclosing the tenant on MLS. SABOR listings should indicate tenant occupancy and lease end date in agent remarks. Hiding it wastes everyone's time and generates offers you cannot accept.
• Ignoring pets and unauthorized occupants. If your tenant added a roommate or a dog without written consent, deal with it before listing. The buyer will inspect and will ask. Surprise occupants kill deals.
• Skipping the walk-through until the day of closing. Do a documented interior condition check when you list and again a week before closing. Photos and a dated checklist protect you if the tenant later claims the buyer damaged something during a showing.

Bottom line

A tenant-occupied sale in San Antonio is not harder than a vacant sale — it is just more paperwork and more communication. Handle the lease disclosure on TREC 51-0, get the estoppel signed early, transfer the deposit correctly under § 92.105, and price for the buyer pool you actually have.

When you are ready to list, you can put a tenant-occupied home on HomeFinder and reach the investor and 1031 buyers who value the rent stream — start at /list-your-home, or find a San Antonio agent who has closed tenant-in-place deals at /agents.