It’s time to put your property on the market, sell up, and move on. There’s just one catch – the people living there.

If you have tenants, selling your property becomes a lot more complicated. 

Your first decision is whether you’re going to sell the property empty or tenanted. These come with different legal responsibilities and obligations, but both situations should be handled sensitively. Selling isn’t just stressful for landlords, it’s a huge upheaval for tenants who are at a disadvantage in today’s competitive rental market.

Selling a tenanted property

With tenants at home, you can’t just throw open the door for viewings. Prospective buyers will have to make appointments well in advance as you need to give your tenants plenty of notice. Under the Residential Tenancies Act (RTA), a landlord, broker, or salesperson, can enter a rental unit to show it under the following conditions:

• They’ve given the tenant written notice at least 24 hours beforehand
• They’ve outlined in that notice the reason for entry, date of entry, and time of entry (this must be between 8am and 8pm)

If you’ve found a buyer and you’re ready to close the deal, both parties should be aware that when selling a tenanted property, the new owner assumes all current leases – meaning they will essentially step into your shoes as landlord. If they buy the property before the end of the lease, they have to honour it and can’t force the tenant out until the lease expires.

Of course, this doesn’t guarantee that they will keep all conditions the same. Your tenants should be aware that things may change. Their new landlord may want to increase the rent, renovate, or simply redecorate – it’s not uncommon for new owners to want to make their mark on a place. 

Help put your tenants at ease by arranging a meeting with their new landlord so they have a chance to get to know them and air their concerns. Be open with the new owner about what kind of a relationship you have with your tenants, and any special accommodations you’ve made for them. 

Evicting tenants 

If you want to sell your property without tenants, you need to communicate with them well in advance – giving them plenty of time to make other arrangements. 

Of course, it’s not always possible to wait for your tenants to move out before selling. What happens if you want to accept an offer but the buyer isn’t interested in being a landlord?

In this situation, you can terminate the tenancy agreement when the property is sold – provided the purchaser intends to use the property for their own use. This is to prevent buyers turfing out your tenants because they want to rent to someone else. They have to show that either they, or their family members, intend to move in and live there. 

If this condition is met, landlords can then evict their tenants by taking the following steps:

1. Issue your tenants with an N12 Notice to Terminate Tenancy form
2. Give tenants a notice period of at least 60 days (termination date must be the last day of the rental period or lease term)
3. File an L2 Application to Terminate a Tenancy and Evict a Tenant (this must be filed no later than 30 days after the termination date in the notice and the person who will occupy the unit must also file an affidavit with the application)

Negotiating with your tenants

Evicting tenants takes time – new owners can’t force them out until the end of their lease and if the tenants aren’t happy about being uprooted, they could challenge the eviction notice, tying both parties up in costly disputes and hearings.

Given the ongoing backlog at the Landlord and Tenant Board, where it can take months to even schedule a hearing, this is obviously not ideal. The best case scenario is to work with your tenants to see if they’re agreeable to ending their lease early and moving out before the sale goes forward. 

Any negotiations will obviously have to be handled carefully. Don’t put pressure on your tenants or back them into a corner.  Communicate clearly about what you intend to do and the timeframes involved. Be sensitive to your tenant’s needs and help where you can, leveraging any contacts you have among other landlords or property managers. A smooth transition is in both your interests, and selling is stressful enough without adding tenant disputes to the mix!

If you need help selling your property or negotiating with tenants, get in touch. Our professional and friendly team has over 30 years experience managing properties across the GTA. From tenant vetting to repairs and maintenance, we offer full-service property management. Contact us today to schedule a consultation.