I'm considering renting a house from an agent. In conversation they let slip that the owner of the place was considering selling it . Can they legally do that? Can they enter a lease agreement with a tenant with the intent of selling the property out from under them? Would the new owner be legally bound to the terms of the original lease or are the tenants just plain out of luck? Can the new owner hike up the rent legally after purchasing it to force the tenants out?

If it is a short term lease only, and they are intending to sell it, I guess they need income during the time it is up for sale. Of course, I don't suppose the rental would be yearly. No one could sign a year lease if the property is up for sale. I guess you had better ask more question of the realtor.

First any rental property can be sold. If you did not have a lease then you can be just given a notice. But read your lease very carefully as to any clause.

But normally the lease has to be honored by the buyer.

If there is a month to month rental, the new owner can do almost anything, raise rent, ask you to leave, change the pet clause.

Why not? When a property is sold, any encumbrances on that property are sold with it. So if the property is sold with a rental lease in force, that lease has to be honored. Of course, selling a house with a tenant makes it harder to sell, but that's not your concern.

If you are lookiong for a long term (several years) residence, then this may not be the one for you, but if you are only planning on staying until the lease is up, then the fact that its up for sale should have little bearing on your decision. The only caveat is that you may be inconvenienced when the house is being shown.