If you own a rental property in Toronto and are ready to sell your investment, it’s important to know how to handle the transaction, especially if you have tenants. Can you sell a house with tenants living in it? Absolutely. But there are some important rules to follow when it comes to selling a house with tenants.
HOW TO SELL A HOUSE WITH TENANTS
When it comes to selling a house with tenants in Toronto, it’s important to be respectful of the tenants and their lease agreement. If your tenants are still within the first year of their lease, you have to honour the terms of their lease. With that in mind, it’s best to wait to list your house for sale until the end of their year lease or when they are on a month-to-month lease.
One rule all Ontario landlords and tenants should be aware of is that all leases that continue beyond a year, by law, move to month-to-month even if you and your tenant have signed a subsequent one year lease.
GIVING NOTICE TO RENTERS OF INTENT TO SELL
If you know for certain that you will be putting your house for sale, it’s always generous to let your tenants know as early as possible. Technically, no formal notice needs to be given until your house has actually sold, but writing an email or letter to tenant of intent to sell property will give them time to get their ducks in a row.
Especially in Toronto’s wild and crazy rental market, finding a new place to rent can be challenging for renters. The more notice, the better.
HOW MUCH NOTICE DO YOU NEED TO GIVE TENANTS?
When your house sells, if the new buyers are planning to move in to the property, you are required to give your tenants 60 days notice from the first of the month that their tenancy will be ending.
For instance, if your property sells on April 4th, the 60 days notice doesn’t take effect until May 1st, which means your closing date will be August 1st.
Once the property sells firm and you give notice to tenant to vacate due to sale, you will need to serve them with an N12 form which is the Notice to End Tenancy form.
If the buyers plan to continue using the house as an investment property, they have to assume your tenants and the terms of their existing lease. The new owners are not allowed to increase the rent anymore than the established rent increase guideline which is currently 2.2% per year (2020).
WHAT ARE A TENANT’S RIGHTS WHEN HOUSE IS FOR SALE?
As we mentioned earlier, a tenant that is still within their first year of their lease has the right to live in the property until the end of the year lease, supposing you have given them 60 days notice as the end of their year lease approaches.
If your tenants are on a month-to-month lease (anything after the first year), you must provide them 60 days notice from the first of the month.
As a landlord selling a house, tenants rights with viewings are simply that they must be given 24 hours notice. When the house is on the market, the property must be made available for real estate agents and their prospective buyers to see.
So long as you’ve given your tenant the 24 hours notice of any scheduled viewings, your tenant is not allowed to deny access to the property. A tenant has the right to be present for the showings if they prefer.
At the end of the day, it’s always in your best interest to cooperate with your tenant when selling a house with tenants. If you have any further questions regarding selling a house with tenants, please refer them to the Landlord and Tenant Board.
If you own a rental property and are looking to sell this year, book a call with us to get started!