Selling Tenanted Property

Selling property that is tenanted poses several challenges for Ontario landlords and realtors.

Firstly, Ontario law does not allow the landlord to get possession of a property for the purposes of selling. Generally, the property must be sold with the tenant in place. Only if the purchaser intends to use the property as a residence can the purchaser commence legal proceedings to remove the tenant at the end of the tenants lease. Proceedings cannot be commenced until after and agreement of purchase and sale is signed.

Unless the tenant agrees to move the result is that the property must generally be listed, shown and sold with the tenant in place.

Living in a unit that is listed for sale is not fun with constant showings and very little privacy. Often if you explain the situation a prudent tenant will prefer to leave beforehand rather than suffer the inconvenience only be faced with the same eventuality.

Alternatively if the premises are exempt from rent control a rent increase can be used to regain possession for sale.

In either of the above cases requires planning as it takes 90 days to increase the rent and the same amount of time to negotiate with a tenant to move on a reasonable schedule.

Even if you are selling with the tenant in place it is crucial to communicate with the tenant and work around them to facilitate the sale.

The tenant is ultimately in control of the property and how it will be shown to prospective purchasers. The tenant can also refuse entry and cause other problems. While the law provides the landlord with remedies against tenant who frustrate a sale the remedies take months to enforce. In all but the most extreme cases negotiation is a better route.

Negotiation can often be best accomplished through a third party (such as a realtor) as they are one step removed from the situation. The person conducting the negotiation should have a solid understanding of the law and process in this area and experience negotiating with tenants in these circumstances.

Working with your tenants will enable you to have the best showings, get the best price and avoid unnecessary risks of problems with your transaction. If you would like to discuss a specific situation I invite you to give me a call or email.