Owning an income property is a great way to improve your assets but the sale of a home with a tenant can come with it’s own set of challenges.
There are some things you should know if you are:
- a landlord who is considering selling the residence
- considering buying a residence and using it as an income property (with or without current tenants)
- in the market to purchase a residence for personal use
The first thing to keep in mind is that there are laws to protect tenants. If you do not go about the removal of tenants the appropriate way, you might find yourself going to the Landlord and Tenant Board.
As long as a landlord is well informed, gives the right amount of notice, fills out the right forms and does their due diligence, there will never be any need for legal action against them.
- You must give 60 days termination notice for a monthly or yearly lease agreement
- A termination notice may only be given at the end of the month, if a notice is give at the beginning of the month the 60 days notice will start at the beginning of the next month
- A landlord can give a termination notice on behalf of the purchaser, if the purchaser requires the home for personal use, once the landlord has entered an agreement of purchase of sale (also referred to as an Offer)
- Tenants must receive 24 hours notice that the home for sale is going to be shown to potential buyers.
- It is recommended that the seller of the home make the showings as painless as possible for the current tenants. Have the selling agent present at each showing to ensure the potential buyers are respectful, keep an eye out for appropriate rentals, and provide gift cards to restaurants or for coffee. Respectful acts towards the tenant will make a big difference.
- If a termination notice has not been given, and the purchaser does not require the home for personal use, then the tenants are legally entitled to continue their lease until the completion date. The lease and rent due is transferred to the purchaser of the home.
- The purchaser of the home and new landlord may not increase rent until 12 months have lapsed since the start of the lease or since the last rent increase.
- The new landlord still has to give the tenants 90 days notice of a rent increase.
If you’re looking for advice or have questions relating to buying or selling with tenants please give John 705-727-6111 or Christie 705-220-1152 a call. If you are experiencing a difficult situation with tenants and trying to sell, it can be helpful to have a Realtor as a partial third party.