Selling a Tenanted Property: What You Should Know

02.26.21 | For Sellers

Selling a Tenanted Property: What You Should Know

It’s finally time. You’re ready to put your investment property on the market—and enjoy the resulting return. There’s just one problem. You have a tenant.

Owning an investment property comes with many benefits, including steady, passive income and long-term price appreciation. One of the potential downsides is that when you have a tenant, things can get a little complicated when it’s time to sell. Fortunately, knowing the facts can make it easier to take this step.

If you’re selling a tenanted property, here’s what you should know to make the process as smooth as possible…

The rights of your tenants

It goes without saying that your existing renters have rights, and you must respect them throughout this process (because it’s the law—and the right thing to do).

First off, if your tenants are still in the first year of their lease, you must abide by its terms. It’s only after this initial period is over that you can terminate their tenancy. Of course, there are rules around doing so. You must provide them with two months’ notice, starting from the first of the month. For example, if you were to inform your renters that you’ve sold your property on March 15th, that period would begin on April 1st.

When it comes to showings, you’ll need to provide your tenants with at least 24 hours’ notice. Be aware that they aren’t obligated to leave your property when you bring prospective buyers in (though many renters prefer to do so).


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Necessary steps

If your tenant’s lease is up, there’s a right way to let them know that you’re planning to end their tenancy. You’re required to give them their 60 days’ notice after the property has sold. That said, it’s nice to give them as much advanced warning as possible. If you know you’re planning to sell, try to tell them sooner rather than later.

When it’s time to give them their official notice, you’ll serve your renter with a Notice to End Tenancy (aka an N12) form. The exception is if your buyer is planning to use your space as an investment property. If that’s the case, they’ll need to take on your tenant—and their current lease terms.

Getting the best price

Selling a tenanted property can be somewhat complicated, but that doesn’t mean you can’t get a great result. To maximize buyer interest and get the best price possible, you’ll want to ensure your property looks its best. That can be a challenge when it’s tenanted. Unfortunately, you won’t have control over how the space you’re showing looks.

One option is to offer your tenant a months’ rent to move early (and assistance finding a place if it helps). Having a vacant property will put you in the driver’s seat—so you can clean it, perform any necessary repairs, and have it staged. These steps consistently help sellers get top dollar.

If this isn’t an option, your tenant may be willing to work with you to help ensure that your space makes a great impression. It’s just one more reason to maintain a good impression with those who rent from you!

If you’re unsure about how the process works, a skilled local real estate agent can help. It’s also a good idea to review the Residential Tenancies Act—and ask a lawyer if you have any questions about it.

 

To learn more about our approach to selling, see our latest Selling Guide.

 

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