While most landlords are holding on to their properties for long-term rental situations, there may come a time when you want to sell a property you are holding to move on to other investment streams. The property might be outside your ideal market, underperforming, or just not in line with your current business plans.
Is selling a tenanted property in Toronto possible? This is a question many landlords like you have when they turn their eyes to selling. Today, you can learn just how to go about selling a tenanted residential property.
The proper procedure is essential during this process. From sending a notice of intent to sell a rental property to doing showings in the right way, you want to be sure you are doing things by-the-book.
It’s time to learn how to do just that!
Can I Sell My Property With a Tenant in it?
As a landlord, you are legally permitted to sell a property with a tenant in it, and this can be done with or without informing the tenant about your plans to sell. Of course, letting your tenant know what you are planning to do is always a good move, so they are not caught in a difficult situation.
The sale of the home will include the transfer of the existing lease you have with your tenants to the new owners.
In most cases, the new owners will be taking over the lease until the lease period is up. Unless you and your tenant decide to dissolve the lease agreement before the sale takes place, it will be up to the new owner to deal with any arrangements or early move-out incentives with the tenant.
What is the Process for Selling a Tenanted Property?
Many area landlords have never tried selling a tenanted property in Toronto; you might be like them and are unsure where to begin the process.
Overall, the process doesn’t need to be complicated! As long as you follow these steps, you can keep the situation under control.
Step 1: Talk With the Tenant
While tenants do not legally have to be told about your plans to sell the property, it is usually to your benefit to keep them in the loop throughout the process.
You will need to work with them to arrange showings and other inspections, so it is better to be clear with them from the beginning.
By opening communication lines, your tenant will be able to ask any questions, and potential problems will be resolved before they even occur.
One of the easiest ways to do this is to send the tenant a notice of intent to sell the rental property.
Step 2: Market the Property
Put the property on the market and include some information about the rental income potential as well. All of your listing information must include that the property is currently tenanted; it’s best to mention when the current lease period will expire.
Work with your tenant to get updated photos of the property. All showing appointments must be scheduled with the tenants at least 24 hours in advance, so it is best to discuss a potential showing schedule with the tenants early in the process.
Step 3: Sign the Deal
When you sign the deal to sell the property, any existing leases will need to be part of the process. They will be transferred over to the new owners, and the new owners can then decide how they want to proceed.
Sometimes, they will continue to lease the property. At other times, they’ll let the lease expire. Regardless, the agreement is no longer your concern once it has been transferred.
Does the Tenant Have to Move Out?
Tenants living in rental properties in Toronto are not required to move out when a property is sold, but there are some situations in which a move-out may occur.
The Tenant Agrees To Move Out
If you prefer to try to market the property without a tenant, you might be able to set up a deal with the tenant in which they move out for some monetary incentive. This must be agreed on by both parties and cannot be presented as a forced eviction.
The Tenant is on a Month-By-Month Lease
If a tenant is on a monthly lease and the new owner or their family member plans to move into the property, the tenant should be given 60 days’ notice that they will need to move out.
The new owners can give the tenants 60 days’ notice from the first of the month that they want to move in, but they cannot require that the tenant leave just so they can rent to someone else.
If the new owner gives 60 days’ notice and then rents to someone else, the former tenant can make a case for a bad-faith eviction with the Landlord and Tenant Board.
The Tenant is on a Long-Term Lease
If the tenant signed a long-term lease with you, the new owners cannot require them to leave and must agree to take over the agreement until it expires.
Selling a tenanted property in Toronto is possible and easy to do. As a landlord, your responsibilities will continue as they are stated in the lease until you transfer the lease to the new owner.
Keep this in mind:
- Open communication with the tenant(s) will help things run smoothly
- 24-hour notice is required for showings
- Tenants cannot be forced to move out
The process of selling a tenanted property is simple, but finding a new owner who is ready to take over a tenanted property might not be as simple, depending on the location. If that’s the case, you may want to finish out the lease and then work on selling the property without a tenant. Ultimately, the right choice depends on your long-term plans.