Typically when a vendor sells a property, they agree to deliver “vacant possession” of the property – meaning that outside of any items the buyer and seller have agreed are to be left behind, the property has to be completely empty on closing day, including having no occupants living in the property. However it is not always realistic to sell a property that has tenants living in it, and expect them to agree to move out before your closing date. If you find yourself in a position where you are selling a tenanted rental property, there are two main courses of action vendors typically take:
List and sell the property as a rental.
There are lots of buyers who are looking for rental properties, and if they can find one that already has tenants in it, then even better. Residential leases in Ontario do not require that a landlord gets the permission of their tenants before selling, so you are free to sell to whoever is willing to buy. Listing a property with occupants is often seen as a selling point, rather than a detractor to purchasers.
Giving Rental Tenants Notice
Under section 49 of the Residential Tenancies Act, if you are selling a property that has one to three residential units, and either the; buyer, the buyers spouse, a child or parent of the buyer, or anyone who is a caregiver of any of the aforementioned personally requires the unit, then the vendor on behalf of the purchaser, can give the tenants occupying the property a notice terminating the tenancy. In order to qualify for this, the tenants have to be on a month to month lease and notice needs to be given at least 60 days prior to the end of the rental period (usually month end). If all conditions are met and notice is properly given, then the tenants are obligated to leave the property once the notice period expires.
In addition to either of the above options, it’s often easiest to have a conversation with your tenants. Some tenants can be induced to sign an agreement to end the tenancy by allowing them to live at the property at a reduced rate until it is sold, or even receiving cash compensation for agreeing to end the tenancy prematurely.
If you have any questions regarding the sale of a rental property, or other legal real estate questions, please feel free to contact us via website, email, or phone.