Selling a property that is currently occupied by a tenant can be a complicated process. Guaranteeing vacant possession of the property when the tenant legally controls possession is even more difficult. This is why it is important to understand the legal complexities of buying and selling tenanted properties.
To shed some light on this topic, Bita di Lisi, a property manager, real estate broker, licensed paralegal, and owner of Stonegate Legal Services, sat down with TRREB Chief Market Analyst Jason Mercer to discuss the options available to landlords when selling a tenanted property, along with other legal details that buyers, sellers, and real estate agents should be aware of.
The conversation covered several topics, including the three ways a tenancy can be terminated, the difference between serving a tenant with an N11 or N12 form, what buyers of tenanted properties should see on the Statement of Adjustments on closing, and a cautionary tale for real estate agents and landlords.
One of the most common questions that Bita receives from agents is whether tenants can be evicted to sell the property. The answer is no, as the tenant legally controls possession. However, there are three ways in which a tenancy can be terminated: by the tenant giving notice, by mutual agreement, or by way of a court or board order.
It is important to note that there is a difference between serving a tenant with an N11 or N12 form. The N11 form is used when the tenant agrees to end the tenancy and vacate the property on a specific date. The N12 form is used when the landlord requires the property for their own use, or for the use of an immediate family member or caregiver. Bita also gave a helpful tip for sellers, advising them to use the N11 form instead of the N12, as the N12 can be challenged in court and may delay the closing of the sale.
Buyers of tenanted properties should also pay close attention to the Statement of Adjustments on closing. This document outlines the costs associated with the sale, including adjustments for rent and other expenses related to the tenancy. It is important for buyers to ensure that the adjustments are fair and accurate.
Finally, Bita shared a cautionary tale for real estate agents and landlords. Asking for too much from prospective tenants landed one brokerage with a human rights complaint. It is important to follow proper legal procedures and to treat tenants fairly and with respect.
In conclusion, buying and selling tenanted properties requires careful consideration of the legal complexities involved. By understanding the options available to landlords, the difference between N11 and N12 forms, and the importance of the Statement of Adjustments, buyers, sellers, and real estate agents can ensure a smooth and lawful transaction.