What Sellers Know About Selling Their Condo With Tenants in Toronto, Today?

The number of tenants in Toronto is seeing a slight surge upwards but can go down at any moment. The city is at a high risk of a real estate bubble ready to burst. This is further compounded by the rising prices of homes and condos, which have reached an exorbitantly high level.

Sellers currently are looking to sell their homes in order to reap the benefits of high property prices. Buyers right now are facing a crunch when it comes to buying a home. Vancouver was at a higher risk than Toronto as its market recently cooled down.

Sellers are also looking to sell their homes (houses, apartments, condo townhouses, and condos) to benefit from rising property prices. Some have their homes on rent with tenants and often wonder how to sell it with a tenant present.

They can, in fact, sell their homes with tenants living in it. However, there are some important rules tenants must follow when it comes to selling a home with tenants residing in it.

How can condo owners sell their homes with tenants?

In terms of selling a home with tenants in Toronto (whether it is a condo, an apartment, a condo townhouse or a house), homeowners must be reminded about the importance of being respectful to the tenants and their lease agreement.

If the tenants are still within the first year of their lease, homeowners must honor its terms. In this regard, it is best for them to ait to list their home for sale until the end of their yearly or monthly lease.

There is one rule which all landlords and tenants in the province of Ontario should know. It is that all leases continuing beyond a year, by law; move to month-to-month even if the landlord and their tenant have signed a subsequent lease of one year.

Here are some key tips homeowners must follow when selling their condo with tenants in Toronto:

1.   Communicating with the tenants

Landlords are not prohibited from selling their condos with tenants in it but it would be wise for them to contact their tenants before selling it out. After all, it is difficult to find out what emotional moments the tenant may go through once they get wind of the property going for sale. Tenants have their rights too and must be contacted by the landlord when the property is going for sale.

2.  Awaiting the lease agreement’s end

There is uncertainty in not finding out whether the tenants will cooperate in getting the residential property sold. They thus risk wasting a lot of time waiting to be sold, resulting in the investment becoming stale. A lot of landlords and homeowners prefer waiting until the lease agreement’s end before placing the property on the market.

3. Communicate clearly with cooperative tenants

Realtors are of the view that selling a condo with tenants in it creates a messy situation. There are many instances where tenants do not cooperate with the landlords and prevent a timely sale of the property.

On one hand, the tenant’s privacy is a must. On the other, it is important for them to understand the need to be accommodative when showing the property to the prospective buyer.

When the tenants are cooperating with the landlord in the property sale process, the key here will be clear communication. When tenants are cooperative, landlords can lend a generous hand in helping them find another property to live in.

4. Incentivize tenants who are not cooperating

The problem with non-cooperative tenants is that they may be a threat to both the landlord and the prospective buyer. Any untoward incident will result in the prospective buyers stepping away from buying that property and that property becoming a no-buy property of sorts.

However, landlords can incentivize their tenants. Cooperative tenants get to see more rewarding incentives heading their way for their cooperation in the sale process. Non-cooperative tenants might have a change of heart and attitude about the incentive they will get.

Giving tenants notice of intent of sale

If homeowners have decided when to sell their home out, they must first inform their tenants about this as early as possible. In technical terms, there is no need for a formal notice to be given to the tenant until and unless the home has been sold.

However, writing a letter (or an email at least) to the tenant of intent to sell the residential property will buy them some time to organize their belongings and find a new place to live in the best possible manner.

This should be done in the best possible manner, keeping in mind the current conditions of Toronto’s property market where it is difficult for buyers to find a reasonable price for Toronto Condos on sale in listings. Same goes for tenants looking for a nice condo or apartment for rent.

If homeowners wish to assist their tenants in finding a new place to live, then it is considered as the best and most generous of gestures.

What is the ideal notice period to be given to tenants?

Homeowners are required to give their tenants a notice of 60 days from the first day of the month (when their tenancy will start to end). This should be given when the house is to be sold (or has been sold) and when the new buyers are planning to move in that property.

Let’s consider a small example. When a homeowner sells the residential property on say, May 17, the notice does not take effect until June 1. Meaning, the closing date of the deal will be August 1.

Once the property’s sale deal is sealed, and the sale is made; homeowners give the tenant a notice to vacate the property considering the sale. Thus, homeowners must serve them with an N12 form (Notice to End Tenancy form).

If the buyers have a plan to use their newly bought home as an investment purpose property, they must assume their tenants and the terms of their existing lease as well. New owners are not allowed to increase the rent beyond the established rent increase guideline which is currently at 2.2% per year.

What are the rights of a tenant when a residential property is available for sale?

As mentioned earlier, a tenant that is still within the first year of their lease has the right to live in the property until and unless the end of the year lease has arrived. This is also dependent on the condition that homeowners have given the tenants a notice period of 60 days as the end of their year lease comes fast.

If the tenants are on a month-to-month lease (something after the first year), they must provide them at least a notice period of 60 days from the first day of the month.  

For landlords selling their condo, the rights of tenants in simple terms are that they should be given 24 hours notice. When the condo is on the market, the residential property must be made available to real estate agents and their prospective buyers for observation and examination.

If the landlord has given their respective tenant the 24-hour notice prior to any scheduled viewing of the property, tenants cannot deny the prospective buyers access to the property. A tenant has the right to be present when buyers are viewing and observing their properties, provided if they want to.

It is always in the best interests of the landlord to contact their tenant and cooperate with them when it comes to selling the condo with tenants living in it. In case of any issues arising in the matter, either of them can refer the matter to the Landlord and Tenant Board of the Government of Ontario.