rss twitter facebook linked in
#
John Helfrich, Broker, Real Estate Homeward , Brokerage | 416.698.2090 | Direct: 416.464.8920 | John@EastEndTorontoHomes.com

Tips for Selling Toronto Income Properties with Tenants

August 24, 2011

It's still possible to sell Toronto Income Properties when they're occupied by a Tenant - if you follow the rules.

Selling Toronto Income Properties with TenantsMost of the time, I sell homes for the people who live in them. Whether it's Downtown Toronto condos, or homes in The Beaches, Danforth Village, Leslieville or Riverdale, they're usually owner-occupied. And the owners are eager to collaborate on the staging and showings because they're going to reap the benefits of a successful sale.

But what if you're selling a Toronto income property that's tenanted? The Tenants pay their rent on time, they have no plans for moving and they're busy with work, exams, or family. Then you announce that you're going to sell.  There's a good chance they're going to be concerned - if not downright upset.

While you're thinking of how to reinvest your capital, they're agonizing over having to find a new place to live. Most are concerned about their privacy being invaded. Some just stress over losing the ability to flop in front of the TV in their pajamas on their one and only night off.

It's only natural that they're going to want to:

  1. refuse to keep the rental property tidy for your benefit
  2. insist upon reasonable notice for showings
  3. resist access when they feel there are so many showings that it's interfering with their life at home

That's just the opposite of what you want to do:

  1. Create an incredibly beautiful, well organized, spotlessly clean living space
  2. Allow access almost anytime
  3. Allow showings with little or no notice required.

There's going to be a problem if you don't have your Tenants cooperation to sell your income property.

"It's your house, but it's their home" a lawyer recently told my client.

Tenants have rights.

The big one is the right to what is called "quiet enjoyment of the premises". In other words, it's their home, and if the Tenants are paying rent on time and not breaking the law, you can't bug them. You can't call them too often, you can't show up unannounced, or enter the premises without a lawful reason after giving lawful notice. And they don't have to leave when there are showings.

Owners have rights.

They have the right to enter the premises between the hours of 8am to 8pm to show prospective Buyers, or to make repairs, after giving lawful notice.

About that 'lawful notice'. For our purposes that means a minimum 24 hours (not just sometime tomorrow) written notice. And email doesn't count as written notice, unless the Tenant agrees to it.

The Pro's and Con's of the Notice and Access Rules

So if a Tenant wants to be uncooperative, they can demand a minimum of 24 hours written notice for each appointment. They can refuse notice by email and insist that written notice be delivered to their address (or in some cases posted on their door).

But the Landlord has the right to show the premises between the hours of 8am and 8pm - 7 days a week. If the Owner wants to be uncooperative, he can tell his Agent to allow showings Saturday and Sunday mornings and the Tenant can't lawfully refuse - without a good reason.

The Absolute Best Tip for Selling Toronto Income Properties with Tenants: Make Peace

This has worked really well for me on several occasions:

  • I explain the law regarding access and notice, quoting chapter and section of the Residential Tenancies Act. I give them the number for the Landlord and Tenant hotline and suggest they verify what I told them. Do not attempt to embellish your rights or strengthen your position. It only undermines trust.
  • I promise that I will respect the law and the Tenants' rights at all times. I let them know that I would expect no less from them.
  • Since the law isn't perfect for either of us, I suggest that we negotiate something better than the law allows, if it works for both of us.
  • I ask the Tenants what their usual schedule is, what times are 'sacred' to them, what hot-buttons they have, and when they're typically out, so they wouldn't notice showings anyway.
  • I propose a showing schedule that minimizes inconvenience for them, if we can have unrestricted access with short notice via phone or email at the other times.

Whatever the agreement, I get it in writing, with the understanding that if it's not working, either party can insist we go back to the Provincial statutes. I've had outstanding success with this arrangement.

More Tips for Selling Toronto Income Properties with Tenants

Plan ahead. Telling a new  Tenant that you'll be selling in a year, at the end of their lease, prevents most of the problems that would arise in the first place. Call me in for a free Income Property Valuation about 4 months before you plan to sell. It helps the Tenants come to terms with the fact they'll need to move. It provides an opening for the conversation about how things will change when there are showings.

Ask the Tenants if they'd like to buy your income property, even if it seems unlikely they'd want to.

If they're really messy, or don't clean at all - offer to get them a maid, at your expense.

If they're really messy, or don't clean at all, offer to let them break the lease and leave early without a penalty.

Offer incentives for unrestricted access. eg, no rent for the days when showings occur, if they'll waive 24 hours notice

If you have a really difficult Tenant, or you need to sell before their lease is up, offer incentives for moving out early - even one months free rent. It's worth it.

Understand that (in some cases) you can sell a Toronto Income Property with Tenants still in it. But there's a much smaller market for these properties so your negotiating position will be considerably weaker.

What about You?

Do you have a story to tell about selling a Toronto Income property - either as a Tenant or a Landlord?  I'd love to hear from you if you have personal experience with this from either point of view. I believe everyone reading this would like to hear about it too.

NOTE: A fire that caused the death of a young couple in a Danforth Village Income Property should be a reminder to all of us, Landlords and Tenants, of the need to have functioning smoke alarms on every level of every home.

This article is for illustrative purposes only and is not meant to be relied upon as legal advice. Please consult a lawyer to ensure the above facts are still accurate, and that they relate to your specific circumstances.


Tagged with: Beaches Danforth Village income properties Landlord Leslieville Riverdale Tenant tenants Toronto Condos Toronto Income Properties Toronto Income Property Toronto real estate investing
| | Share

Testimonials

John Helrich Eat End Toronto Testimonials

John was highly recommended to me by a friend. Right from my first conversation with him I knew he was the right realtor for me. He patiently took time to...

-- Nicole N.

East End Toronto Homes Testimonials John Helfrich
 
Powered by Lone Wolf Real Estate Technologies (CMS6)