Can your tenant hold you, hostage, when selling your property?
There have been horror stories in the media about landlords having to pay tenants exorbitant sums of money to get them to vacate when selling. Other times the tenant refuses to leave, and the real estate deal falls apart. Most tenants cooperate; however, landlords are encountering a higher number of problems when evicting tenants.
There are several things a landlord can do ahead before and during selling to increase the likelihood of a smooth, happy closing.
Thing To Do Before
Informing Your Tenants That You Are Selling
Telling a tenant that you are selling your home is like telling your spouse you want a divorce. They probably are not going to be happy. After all, it is their home, and it probably wasn’t expected. You are best, to be honest, and at the same time, be empathetic.
Let them know that you will do everything possible to make the process the least intrusive. If the tenant does not want to move, ensure that you will let the potential buyers know they wish to stay. Also, if the new owner will be using the home for themselves, family, or a caregiver, you will tell them right away to give them ample time to find another home.
Looking for even more tips to help you succeed as an investor? Look no further than the posts below:
- Five Best Cities in Ontario to Buy Recession-Proof Investment Properties
- Growing Your Wealth Through Real Estate Even in a Recession
- A Complete Guide to Real Estate Investing in Guelph
How To Do Showings
Showing can be disruptive to the tenants. Legally, you are allowed to show the property between 8 am and 8 pm by providing legal notice, which is 24 hours. One way to make this easier on tenants is to set up a showing schedule
For example, a tentative showing schedule could be: buyers may show the home Monday to Friday between 2:00 and 6:30 pm and on Saturday and Sunday between 11:30 am and 2 pm. Realtors will give twenty-four-hour notice.
When houses are selling extremely fast in a very hot seller’s market, some landlords will offer to put their tenants up at a hotel or Airbnb for a few days when showings occur. That way your tenants won’t be interrupted, and showings can happen freely.
Landlords or realtors can give incentives to the tenants, like offering to have their place cleaned or gift cards.
Looking for other ideas to have a smooth and seamless transaction? These resources will give you food for thought:
- Types of Offers and What They Mean
- What Are the Worst Mistakes When Selling Your House?
- Negotiating With Tenants as a Guelph Real Estate Investor
Things To Do During
Valid Reasons That You Can Ask Your Tenant To Leave
Firstly there are only three reasons a purchaser can ask for vacant possession:
- The purchaser is going to be moving into the property
- An immediate family member is moving into the property
- A caregiver attending to the need of the owner or their immediate family is moving into the property.
If the tenant is on the lease, they can not be given notice until the end of their lease.
What Clauses To Put In The Offer
These are a couple of clauses to put in an offer when the purchaser asks you to give the tenants notice to vacate the property.
- The buyer will assume the property if the tenant does not vacate the property
- The buyer agrees to extend the closing if the tenant has not vacated the property
- The buyer aggress not to hold the Landlord liable if the tenant doesn’t vacate
- The buyer agrees to sign an affidavit that they are moving into the property
Giving Notice
The N12 gives the tenant notice to vacate the property. Follow the Landlord Tenant Board rules when giving the N12 to the tenant. Any mistake may cause you to have to start the entire process over and that is why some landlords will choose to have a paralegal do it for them. For instructions for completing the N12, click here.
Common Mistakes Made On the N12
- One of the tenants’ names is missing from the form. The N12 should contain all names on the lease.
- The termination day is invalid. Most rents are due on the first day of the month meaning the termination date should be the last day of the month.
- Failure to give proper notice. It is mandatory to provide a minimum of 60 days’ notice, but there are circumstances where you have to give more. If you are mailing the form, you must provide 65 days’ notice, or if you courier it, give 61 days’ notice to account for the delivery time. If you want your tenant out on February 28th, you must provide the N12 on December 28th to account for February not having 30 days.
- One of the Landlord’s names is missing. Include all the names on the lease on the N12.
After You Have Delivered The N12
- After you have delivered the N12 to the tenant, you may want to file a Form L2-Application to end the tenancy and Evict a Tenant, Certificate of Service & a copy of the N12 to Landlord Tenant Board. You can do this immediately after giving the tenant the N12 and up to 30 days after the termination date. There is a fee of approximately $200 to file but check the LTB website for up-to-date costs. Filing Fees
- Give the tenant one month’s rent on or before termination of tenancy or another rental The tenant is not paying last month’s rent and is also getting one month’s rent. Even if your tenant owes you rent, you still must pay them this rent. To collect rent owed is a completely different process.
Why You Don’t Want To Lie About Eviction
The fines are very hefty if you lie about the reason for evicting your tenant. For an individual, it can be up to $50,000 and a corporation up to $250,000. When asked to give the N12, get in writing confirming the buyer has one of the acceptable reasons for the request.
Here is a link to instructions that goes through everything in detail. Please make sure you read this if you do not use a paralegal or lawyer to give the notice.
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