Owners of investment condos in Toronto have had to have patience for values to improve but perhaps that time has finally come.
Of course you’ve had to deal with several tenants over the period of your ownership and are probably now very familiar with Ontario tenancy laws regarding providing vacant possession of a condo suite.
Tenants who are on leases for a particular set period of time cannot be forced to leave during the term of their lease unless they are in agreement to cancel their lease. Month-to-month tenants can be given notices to vacate, but only if the condo buyer is moving in themselves and provides at least a 60-day notice.
So what are some of the most effective ways to guarantee that your tenanted condo will sell?
Suggestions For Lease Clauses
The best way to start is by inserting several clauses into your tenant’s lease which would deal with accessing the suite for a future sale and buyer showings. Here is some sample wording that you could use…
(E) TENANTS AGREE that, once they have given their notice to vacate at the end of their lease term (60 days prior to the end of the lease), or the property has been listed for sale, the Landlord will require access on a regular basis for purposes of showing the unit to prospective tenants or buyers. Access will typically be required as follows:
Monday - Friday Between 10:00 am to 8:30 pm
Saturday and Sunday Between 11:00 am to 5:00 pm
The tenant will receive confirmation of showing times by either phone call, text message or email sent to the tenant 24 hours prior to the required showing time.
(F) Prior notice shall be given to the exact showing times if different from those times mentioned above. Tenants agree that this shall be their written notice for "Landlord's entry" as required by the Landlord And Tenant Board. TENANTS AGREE that their unit will be kept clean, neat and tidy for all showings, and, if there are dogs on the premises, they will be kept secured in a confined area so that access for showings is not interrupted or prevented.
(G) TENANTS AGREE that, for the 20 business days prior to their move-out date, they will keep their rental dwelling clean and tidy in every way. If this is not done to the satisfaction of the Landlord, Tenants agree that the owner may, at his/her sole option, hire a cleaning person to clean the property and charge the entire cleaning cost to the tenant. If not paid by the tenant, Tenants irrevocably agree that this charge may be deducted from the last month's interest due to the Tenant.
Professional Cleaning May Be Necessary
Even though your tenant’s lease probably has a clause requiring the tenant to keep the suite neat and tidy, I’ve found, after many years of dealing with tenants, that their concept of ‘clean’ may be different from mine.
I’d suggest you first set a time to visit your suite with your Realtor and take a look at how it shows as is and then make a decision as to whether or not a light or serious cleaning is warranted.
Consider Doing Minor Painting And Touch-Ups
At that same visit to your rental suite, take notes and/or photos of other minor fix-ups (marks, scratches, dints, chips, holes etc) that may require some touching up or patching.
Decide whether you can get away with painting over just the patches or should the entire wall be painted. Ideally you’d have the paint chip colour from the first painting job so you could match things up easily.
How To Ensure The Tenant Vacates When They’re Supposed To
There are two scenarios to consider… if your tenant has a lease extending for several months in the future OR if they’re on a month-to-month basis now.
Let’s first consider the situation where your tenant has a lease for another several months but you want to sell your condo suite now AND the likely buyer is an end-user… someone who wants to move into your suite on their own.
Of course you should first ask nicely if the tenant would consider moving out early if you got an acceptable offer from a buyer but, if they’ve just unpacked recently, they’re probably not very motivated to move again so soon.
If you’re committed to selling, the only way to make a sale happen to someone who wants to occupy the suite for themselves is to incentivize the tenant and money is the best way to do that.
There are several options… offer free rent for one or two months (the usual closing time anyway), agree to pay their packing/moving costs or put cash in their hand to give them the funds to pay first month’s rent at their new place.
With any of those options you want to ensure that they do what they’ve said they will… i.e. vacate on the date you need the suite empty for the new buyer. The way to do that is to have the tenant sign an Ontario Landlord & Tenant Board N-11 Agreement To Terminate Tenancy form before you put any cash on the table.
Once signed by the tenant and landlord, this form designates an irrevocable date to vacate the premises. Of course nothing in dealing with tenants is ironclad but if the tenant persists in staying on the premises after the move-out date, you can get an order to have the Sheriff evict the tenant within a reasonably short time.
So, make whatever concessions you need to do with the tenant and then immediately get the Form N-11 signed. Advise your Realtor to set a suggested closing date on the listing about 2 weeks AFTER that move-out date to allow for any unforeseen things coming up with the tenant moving.
Now lets talk about the situation where your tenant is on a month-to-month basis and the buyer wants to purchase your suite for their own use. In your Agreement Of Purchase and Sale you should have a clause authorizing you to give notice to the tenant (Form N-12) to vacate for the buyer’s own use.
That form is the Ontario Landlord & Tenant Board Form N-12 - Notice to Terminate the Tenancy at the End of the Term for Landlord’s or Purchaser’s Own Use.
It applies when a condominium landlord has entered into an agreement of purchase and sale for the property and one of the following people wants to move into the rental unit:
• the purchaser or their spouse,
• the purchaser’s child or parent,
• the purchaser’s spouse’s child or parent,
Since the buyer is not the owner of the condo suite yet, they cannot give this notice… you the existing landlord must do this. And of course you need to have a valid purchase agreement in order to serve this notice.
The notice period to vacate the suite must be a minimum of 60 days after the first day of the next lease period. For example, if the tenant pays rent on the first of each month and your offer is firm by say the 20th of the month, the vacating date needs to be the last day of the month a full two 'plus' months (approx 70 days) later.
Ideally you would be communicating with your tenant on a regular basis throughout the sales process to alert them to the possibility they’ll have to move and then, once you’ve got that firm offer in hand, deliver your N-12 notice.
I’ve often had my sellers offer a smaller incentive to the month-to-month tenant to ensure all requested showings are accommodated and that they keep their suite neat and tidy during the showing period.
It is the kiss of death to a sale if your tenant is hostile and does not allow showings when you need them. You’ve got several hundreds of thousands of dollars riding on a successful closing… offering a tenant, especially one who’s always taken care of their home and paid on time, some compensation for cooperation is a very minor expense in the overall picture.
I always suggest that you take two copies of the form when meeting with the tenant. Give them one copy and then have the tenant sign and date on the back of the second copy that they’ve received this notice. This will forestall any repercussions later where the tenant might say they didn’t receive any notice.
I would also suggest that you have the tenant sign an N-11 Agreement to Terminate Tenancy form to vacate on the same date as on the N-12 notice to make 100% sure that the tenant leaves on or before the agreed-upon date and that your condominium sale isn’t threatened.
The buyer’s agent would also want copies of all N-11 and N-12 notices delivered and signed as would your lawyer for the sale.
Got Time For A Coffee?
You can see there’s a lot involved in selling a tenanted condominium suite and you definitely want to make sure that you don’t make any mistakes or missteps along the way.
It’s also important to work with a listing agent who understands tenancy laws and who is willing to help out and offer advice to make sure you work through the process successfully.
It might be advisable for us to meet for a coffee at your convenience to review this advice.
You can email me at Thomas@LivingInToronto.com and we can get together at a Starbucks near your home or office. If you are outside of Toronto we can set up a time to talk over the phone or online.
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If you are going to sell your suite in the next 1 to 9 months, what you do right now can make a difference of thousands of dollars in your sale price, and there are some simple things you can do forthwith to make sure you get "Top-Dollar" when you do sell.
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First, is our FREE "Pin-Point Price" Analysis, where I can take a closer in-person look at your condo and prepare a very specific price for your suite. This price will be much more precise than the general range that you can get automatically from the site - and we guarantee in writing to sell your condo at the "Pin-Point Price" or higher in less than 32-days.
Second, is our FREE "Room-By-Room Review", where I do a 20-minute walk-thru and make specific recommendations about which fix-ups or improvements you should (and should not) do to prepare your suite for sale. I will point out the lowest cost, highest return improvements you can make to help sell your condominium quickly and for more money.
Third, if you would like, I will include your condo in our "Silent Market" of condominiums that are not yet on the market. Because we generate so much buyer interest from our website, Facebook and Google advertising and other proactive marketing, we may be able to find a buyer for your condo without even putting it on the market… saving you both time and money.
These 3 services are FREE. The Room-By-Room Review takes about an 20 minutes, and we can arrange a time during the day or evening, whenever is most convenient for you.