Why and How to Sell Your Property Without Tenants
A recent post on Reddit asked for legal advice about a situation where the property buyer had asked for vacant possession of the property at closing, but the tenant was refusing to leave by certain deadlines.
Unsurprisingly, many of the commenters were landlords and were advising the poster to not close on the property. The poster had a lawyer, but was just looking for opinions as to whether they should fold or play chicken until the closing date. From the details provided, it looked like the tenant did not want to leave.
Before getting into this situation, it is important to point out that there is no legal way for you to assure vacant possession of a property if a tenant is still in that property. You are expected to come to an agreement with your tenant to leave of their own accord, or sell the property tenanted if they won’t leave.
The only legal way to get the tenant out is to sell the property and have the new owner file an N12 to evict the tenant so they can move in – and most will be unwilling to do that. The ideal situation for everyone is to sell the property completely vacant and to buy it completely vacant. Mortgage issuers may even require vacant possession on a high ratio mortgage – a mortgage without a significant down payment.
Asking a Tenant to Leave to Sell the Property
If your tenant is amenable to leaving, have them sign an N11 form which amounts to an agreement for them to leave the unit by a certain date. In the Reddit poster’s case, they state that the seller told them that the appropriate paperwork had been filed, but didn’t specify whether or not that was an N11 form. They can still decide to breach the N11, in which case you will have to take them to the Landlord and Tenant Board for an order to evict. Technically, they can’t go back on the N11 but the eviction process could take up to a year if they renege.
Alternatively, you can enter a “cash for keys” deal with the tenant. Realtors and lawyers can offer you the best advice for how to manage this, but it does mean paying the tenant a significant sum to leave so that you can sell the property vacant. Often, the difference between selling a property vacant and selling it tenanted makes this kind of deal worth it. Don’t start with a “cash for keys” offer – escalate to it if it is needed, or if you have a long-term relationship with the tenant and want to make things easier on them.
Property Sellers: Don’t Sell With Tenants Unless Your Buyer Wants Them
In the current market climate, you are less likely to sell a tenanted property unless it is to another landlord. People generally know, or will be informed by their lawyers, that evicting the tenant will be on them once they buy the property. That process can take up to a year with the state of the Landlord and Tenant Board, and most buyers won’t want to wait that long.
If you are in a cash crunch with a job loss or multiple mortgages, the “cash for keys” deal is probably the best one to consider to get the most value out of your property sale.
The situation with the Reddit poster remains unresolved with the exception of getting even closer to the closing date. They cite multiple reasons they want to close, including having a baby, a wedding they were planning on using the property for, and so on. But none of those things will be made easier if they accept non-vacant possession with a tricky tenant, and their mortgage company may not even allow the sale to go through.
If you want the right people on your side when it comes to managing any property, Highgate Property Investments knows all of the right regulations and forms. Plus, our services are way more affordable than you think. Get in touch with us today to get started.
