Should I wait to sell until my tenant moves out?

I often get asked: should I wait to sell until my tenant moves out? In a word, yes, if you can, for example where the tenant has already given notice to vacate so that the property will be vacant soon.

Here’s why. It’s always tricky to show a tenanted property, unless it’s an investment property, and by that, I mean one where the net operating income makes it profitable to assume an existing tenant. (Net operating income means how much is left after you subtract taxes, carrying costs, and insurance, assuming the tenant pays everything else. If it isn’t profitable, an investor won’t be interested.)

Most buyers, however, aren’t investors. They’re looking for a home for themselves or perhaps a member of their family. That means, as a seller, you want to show the home at its absolute best, and you want to make sure access is easy.

Some tenants are fantastic. They have wonderful taste and they keep their rental units immaculate. Others, not so much.

I’ve had sellers ask me if they can use the photographs of how they had furnished their homes before they tenanted them rather than have photographs of their current messy tenants. And my answer is: you can, but it’s potentially misleading and anyone who goes to see the property based on those photographs is going to be disappointed, so I don’t recommend it.

If the tenant has moved out, you can do all the small fixes that follow any tenancy and make sure the property shows at its best. Vacant, it’s easy to arrange showings; they can even be auto-notified (meaning automatically confirmed).

A major problem with trying to sell the tenanted property is that under the Residential Tenancies Act,  you have to give 24 hours written notice. Emails aren’t enough; it has to be a notice given to the tenant or left posted on the premises.

Maybe your tenant is super-accommodating and says they don’t need written notice and that  showings are not a problem. That can change pretty quickly. Even the best tenant won’t want to be disturbed at certain times of day, for example, when the baby is sleeping,  or when they have company over, or when they’re studying, or working from home. You will need to confirm every showing with them ahead of time, which you don’t have to do with a vacant unit.

Remember, the tenant gets nothing out of this. If they have given you notice they are terminating their tenancy, that means they are planning on leaving in 60 days. Will they keep everything in pristine condition before then? Will they want to get out of the way on short notice to accommodate a buyer? Don’t forget, they’re moving: they will need time to pack. Their relationship with you is about to end. The last thing they need are a bunch of strangers traipsing through their home while they are in the midst of a move.

What if they haven’t given notice and hope to stay on as tenants even if there is a change of ownership? Well, I’m sorry to say that you are stuck.

Until you find a buyer who plans to move in themselves, or an immediate member of their family, you can’t give notice to the tenant to vacate.  If the new buyer does plan to move in, the tenants are entitled to 60 days’ notice before the end of the lease, the same time period even if it’s a month to month tenancy. The end of that lease could be quite a ways off. And if the buyer isn’t planning on occupying the property themselves, the tenancy can’t be terminated at all. The new buyer will be stuck with it.

In those circumstances, you have to decide whether you want to continue renting until the tenants decide to move out on their own , or take your chances on selling with them there.

It may work out just fine, but I can envisage potential difficulties with a tenant who doesn’t want to leave being asked to cooperate in showings. In those circumstances, you’ll probably have to give written notice of each showing, and make sure you have a duplicate key to let buyers in. (Tenants are not entitled to be present during showings, but I was in a situation recently where only the tenant had a key, not the landlord, and he  insisted on being present, which made showings very difficult to arrange.)

One small but important point: Under the Residential Tenancies Act, 24 hours written notice to the tenant is required when you are showing the property to prospective buyers. There is nothing in the Act that allows a buyer who’s made a firm, accepted offer to see the property again before closing. The 24 hour written notice provisions do not apply once the deal goes firm. There is no automatic right under the legislation to get inside a tenanted property once it’s been sold. 

One or more visits before closing are a common term of most offers.  If the tenant doesn’t agree to those visits, you may be stuck in a situation where you’ve contractually agreed to a term you can’t fulfill.  So make sure the tenant is okay with that clause before you agree to it.


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