If you’re a landlord thinking about selling a tenanted property, this one’s for you. Selling with a tenant in place can be tricky, and navigating the rules around ending a lease is essential to ensure everything stays legal. Let’s break down how to handle tenant evictions when selling your property.

Why Are Landlords Selling Right Now?

It’s no secret that high interest rates have made it tough for landlords across Canada. Condo sales, in particular, have slowed dramatically. Take Milton, for example—there’s a noticeable increase in condos on the market, and many of them are either vacant or tenanted.

For some landlords, selling has become a financial necessity. Carrying costs are simply too high. But if you’re not in immediate financial trouble, it might be worth holding onto your property until interest rates drop again. Timing is everything in real estate! Read more here, about common struggles with rental properties.

The Rules Around Ending a Lease

The Residential Tenancies Act (RTA), lays out clear rules for landlords. Unless there’s a valid cause—like unpaid rent, property damage, or illegal activity—you’re looking at a “no-fault” termination.

So, what does that mean? If your tenant hasn’t done anything wrong, you can’t simply evict them because you want to sell. You’ll likely need to offer compensation to reach an agreement.

Why Your Relationship With Your Tenant Matters

Let’s talk about landlord-tenant relationships. If things have been smooth and respectful, great! You’ll have a much easier time having an honest conversation about selling the property. But if there’s been tension, things might get tricky.

Tenants aren’t legally obligated to leave just because you ask them to, so finding a solution that works for both parties is crucial. Keep in mind that you’re uprooting someone from their home. In today’s tight rental market, they’re likely looking at higher rent and moving expenses, which can be stressful.

Negotiating Compensation

If you’re selling a tenanted property, paying your tenant to leave is often the simplest solution. In Ontario, the law requires landlords to pay at least one month’s rent as compensation. But offering more can go a long way toward reaching an amicable agreement.

Consider sweetening the deal with two or three months’ rent as a lump sum. Expect your tenant to negotiate—this is where a Realtor can step in as a mediator to help formalize the process. Ultimately, it’s up to you to decide if the cost of compensation is worth the benefits of selling a vacant property.

Staging and Showings

If your tenant agrees to leave, great! A vacant property is much easier to stage and sell. But if they stay during the sales process, remember:

• You can schedule showings with 24 hours notice, but you can’t move or replace their belongings.
• Respect their space to avoid souring the relationship further.

A staged property typically sells faster and for a higher price, so offering compensation to vacate could pay off in the long run.

Be Wary of Wrongful Evictions

Here’s a cautionary tale: if you evict a tenant on the grounds that the new owner will occupy the property but the buyer ends up renting it out instead, you could be in hot water. The tenant may have grounds to sue for wrongful eviction, and fines can reach up to $35,000.

Always ensure your intentions are clear, and stick to the rules. A misstep here can cost more than it’s worth.

Residential Property Management

To relieve yourself of the inconveniences and responsibility of managing rent collection, property inspections, rent increases, filing notices, and more, hiring a reliable property management company to take care of this for you is something to consider. Most companies will handle everything for you, allowing you to enjoy the appreciation of your asset without the inconveniences. It’s also helpful to have a buffer between you and your tenant; oftentimes, tensions between Landlords and Tenants arise naturally, and a third party frequently de-escalates this tension, resulting in a happier, more respectful tenant and a happier landlording experience.

It Starts With a Conversation

Selling a tenanted property doesn’t have to be a nightmare. The key is open, honest communication with your tenant. Start the conversation early, explain your situation, and aim for a solution that works for both parties.

If you’re navigating this process and need expert advice, reach out to KT Realty. Whether you’re selling a tenanted condo or another investment property, we can help you make the process as smooth and stress-free as possible. Call us at 1 (800) 617-0090 today!